Correlation Between PT Bank and Talanx AG

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Can any of the company-specific risk be diversified away by investing in both PT Bank and Talanx AG 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 Talanx AG 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 Talanx AG, you can compare the effects of market volatilities on PT Bank and Talanx AG 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 Talanx AG. Check out your portfolio center. Please also check ongoing floating volatility patterns of PT Bank and Talanx AG.

Diversification Opportunities for PT Bank and Talanx AG

-0.67
  Correlation Coefficient

Excellent diversification

The 3 months correlation between PQ9 and Talanx is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding PT Bank Mandiri and Talanx AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Talanx AG 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 Talanx AG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Talanx AG has no effect on the direction of PT Bank i.e., PT Bank and Talanx AG go up and down completely randomly.

Pair Corralation between PT Bank and Talanx AG

Assuming the 90 days horizon PT Bank Mandiri is expected to under-perform the Talanx AG. In addition to that, PT Bank is 3.36 times more volatile than Talanx AG. It trades about -0.14 of its total potential returns per unit of risk. Talanx AG is currently generating about -0.01 per unit of volatility. If you would invest  8,380  in Talanx AG on October 8, 2024 and sell it today you would lose (30.00) from holding Talanx AG or give up 0.36% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

PT Bank Mandiri  vs.  Talanx AG

 Performance 
       Timeline  
PT Bank Mandiri 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
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.
Talanx AG 

Risk-Adjusted Performance

12 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Talanx AG are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile basic indicators, Talanx AG exhibited solid returns over the last few months and may actually be approaching a breakup point.

PT Bank and Talanx AG Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with PT Bank and Talanx AG

The main advantage of trading using opposite PT Bank and Talanx AG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PT Bank position performs unexpectedly, Talanx AG 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 Talanx AG will offset losses from the drop in Talanx AG's long position.
The idea behind PT Bank Mandiri and Talanx AG 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.
Check out your portfolio center.
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.

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