Correlation Between Rayonier Advanced and PT Bank

Can any of the company-specific risk be diversified away by investing in both Rayonier Advanced and PT Bank 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 Rayonier Advanced and PT Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Rayonier Advanced Materials and PT Bank Mandiri, you can compare the effects of market volatilities on Rayonier Advanced and PT Bank 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 Rayonier Advanced with a short position of PT Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rayonier Advanced and PT Bank.

Diversification Opportunities for Rayonier Advanced and PT Bank

-0.11

Correlation Coefficient

Rayonier Advanced  PT Bank

Good diversification

The 3 months correlation between Rayonier and PQ9 is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Rayonier Advanced Materials and PT Bank Mandiri in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PT Bank Mandiri and Rayonier Advanced 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 Rayonier Advanced Materials are associated (or correlated) with PT Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PT Bank Mandiri has no effect on the direction of Rayonier Advanced i.e., Rayonier Advanced and PT Bank go up and down completely randomly.

Pair Corralation between Rayonier Advanced and PT Bank

Assuming the 90 days horizon Rayonier Advanced Materials is expected to under-perform the PT Bank. But the stock apears to be less risky and, when comparing its historical volatility, Rayonier Advanced Materials is 2.6 times less risky than PT Bank. The stock trades about -0.3 of its potential returns per unit of risk. The PT Bank Mandiri is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  35.00  in PT Bank Mandiri on October 4, 2024 and sell it today you would earn a total of  1.00  from holding PT Bank Mandiri or generate 2.86% return on investment over 90 days.

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

Rayonier Advanced Materials  vs.  PT Bank Mandiri

Rayonier Advanced

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Rayonier Advanced Materials has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Rayonier Advanced is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

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 nearly stable basic indicators, PT Bank is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Rayonier Advanced and PT Bank

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

The idea behind Rayonier Advanced Materials and PT Bank Mandiri 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 Commodity Directory module to find actively traded commodities issued by global exchanges.