Correlation Between SEALED AIR and PT Bank

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

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

Diversification Opportunities for SEALED AIR and PT Bank

0.73

Correlation Coefficient

SEALED AIR  PT Bank

Poor diversification

The 3 months correlation between SEALED and PQ9 is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding SEALED AIR 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 SEALED AIR 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 SEALED AIR 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 SEALED AIR i.e., SEALED AIR and PT Bank go up and down completely randomly.

Pair Corralation between SEALED AIR and PT Bank

Assuming the 90 days trading horizon SEALED AIR is expected to generate 0.28 times more return on investment than PT Bank. However, SEALED AIR is 3.54 times less risky than PT Bank. It trades about -0.06 of its potential returns per unit of risk. PT Bank Mandiri is currently generating about -0.07 per unit of risk. If you would invest  3,440  in SEALED AIR on December 4, 2024 and sell it today you would lose (200.00) from holding SEALED AIR or give up 5.81% of portfolio value over 90 days.

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

SEALED AIR   vs.  PT Bank Mandiri

SEALED AIR

Risk-Adjusted Performance

Very Weak

Over the last 90 days SEALED AIR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, SEALED AIR is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

PT Bank Mandiri

Risk-Adjusted Performance

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

Pair Trading with SEALED AIR and PT Bank

The main advantage of trading using opposite SEALED AIR and PT Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SEALED AIR 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 SEALED AIR 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.

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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.