Correlation Between PT Bank and SCHNEIDER NATLINC

Can any of the company-specific risk be diversified away by investing in both PT Bank and SCHNEIDER NATLINC at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining PT Bank and SCHNEIDER NATLINC into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between PT Bank Mandiri and SCHNEIDER NATLINC CLB, you can compare the effects of market volatilities on PT Bank and SCHNEIDER NATLINC and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in PT Bank with a short position of SCHNEIDER NATLINC. Check out your portfolio center. Please also check ongoing floating volatility patterns of PT Bank and SCHNEIDER NATLINC.

Diversification Opportunities for PT Bank and SCHNEIDER NATLINC

-0.6

Correlation Coefficient

PT Bank  SCHNEIDER NATLINC

Excellent diversification

The 3 months correlation between PQ9 and SCHNEIDER is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding PT Bank Mandiri and SCHNEIDER NATLINC CLB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SCHNEIDER NATLINC CLB and PT Bank is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on PT Bank Mandiri are associated (or correlated) with SCHNEIDER NATLINC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SCHNEIDER NATLINC CLB has no effect on the direction of PT Bank i.e., PT Bank and SCHNEIDER NATLINC go up and down completely randomly.

Pair Corralation between PT Bank and SCHNEIDER NATLINC

Assuming the 90 days horizon PT Bank Mandiri is expected to generate 2.9 times more return on investment than SCHNEIDER NATLINC. However, PT Bank is 2.9 times more volatile than SCHNEIDER NATLINC CLB. It trades about 0.06 of its potential returns per unit of risk. SCHNEIDER NATLINC CLB is currently generating about -0.2 per unit of risk. If you would invest  34.00  in PT Bank Mandiri on October 17, 2024 and sell it today you would earn a total of  1.00  from holding PT Bank Mandiri or generate 2.94% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	94.44%
Values	Daily Returns

PT Bank Mandiri  vs.  SCHNEIDER NATLINC CLB

PT Bank Mandiri

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PT Bank Mandiri has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

SCHNEIDER NATLINC CLB

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in SCHNEIDER NATLINC CLB are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile forward indicators, SCHNEIDER NATLINC may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with PT Bank and SCHNEIDER NATLINC

The main advantage of trading using opposite PT Bank and SCHNEIDER NATLINC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PT Bank position performs unexpectedly, SCHNEIDER NATLINC can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in SCHNEIDER NATLINC will offset losses from the drop in SCHNEIDER NATLINC's long position.

The idea behind PT Bank Mandiri and SCHNEIDER NATLINC CLB pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.