Correlation Between PSB Holdings and Commercial International

Can any of the company-specific risk be diversified away by investing in both PSB Holdings and Commercial International 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 PSB Holdings and Commercial International into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between PSB Holdings and Commercial International Bank, you can compare the effects of market volatilities on PSB Holdings and Commercial International 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 PSB Holdings with a short position of Commercial International. Check out your portfolio center. Please also check ongoing floating volatility patterns of PSB Holdings and Commercial International.

Diversification Opportunities for PSB Holdings and Commercial International

0.15

Correlation Coefficient

PSB Holdings  Commercial International

Average diversification

The 3 months correlation between PSB and Commercial is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding PSB Holdings and Commercial International Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Commercial International and PSB Holdings 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 PSB Holdings are associated (or correlated) with Commercial International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Commercial International has no effect on the direction of PSB Holdings i.e., PSB Holdings and Commercial International go up and down completely randomly.

Pair Corralation between PSB Holdings and Commercial International

Given the investment horizon of 90 days PSB Holdings is expected to generate 0.96 times more return on investment than Commercial International. However, PSB Holdings is 1.04 times less risky than Commercial International. It trades about -0.13 of its potential returns per unit of risk. Commercial International Bank is currently generating about -0.38 per unit of risk. If you would invest  2,700  in PSB Holdings on October 10, 2024 and sell it today you would lose (75.00) from holding PSB Holdings or give up 2.78% of portfolio value over 90 days.

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

PSB Holdings  vs.  Commercial International Bank

PSB Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PSB Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable fundamental drivers, PSB Holdings is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail investors.

Commercial International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Commercial International Bank has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's technical and fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with PSB Holdings and Commercial International

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

The idea behind PSB Holdings and Commercial International Bank 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.