Correlation Between PT Bank and Uber Technologies

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

Diversification Opportunities for PT Bank and Uber Technologies

0.69

Correlation Coefficient

PT Bank  Uber Technologies

Poor diversification

The 3 months correlation between PQ9 and Uber is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding PT Bank Mandiri and Uber Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Uber Technologies 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 Uber Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Uber Technologies has no effect on the direction of PT Bank i.e., PT Bank and Uber Technologies go up and down completely randomly.

Pair Corralation between PT Bank and Uber Technologies

Assuming the 90 days horizon PT Bank is expected to generate 1.25 times less return on investment than Uber Technologies. In addition to that, PT Bank is 1.83 times more volatile than Uber Technologies. It trades about 0.03 of its total potential returns per unit of risk. Uber Technologies is currently generating about 0.07 per unit of volatility. If you would invest  3,026  in Uber Technologies on October 5, 2024 and sell it today you would earn a total of  3,078  from holding Uber Technologies or generate 101.72% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

PT Bank Mandiri  vs.  Uber Technologies

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 fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Uber Technologies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Uber Technologies 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.

Pair Trading with PT Bank and Uber Technologies

The main advantage of trading using opposite PT Bank and Uber Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PT Bank position performs unexpectedly, Uber Technologies 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 Uber Technologies will offset losses from the drop in Uber Technologies' long position.

The idea behind PT Bank Mandiri and Uber Technologies 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.