Correlation Between Wizz Air and PT Bank

Can any of the company-specific risk be diversified away by investing in both Wizz 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 Wizz 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 Wizz Air Holdings and PT Bank Central, you can compare the effects of market volatilities on Wizz 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 Wizz Air with a short position of PT Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wizz Air and PT Bank.

Diversification Opportunities for Wizz Air and PT Bank

-0.59

Correlation Coefficient

Wizz Air  PT Bank

Excellent diversification

The 3 months correlation between Wizz and BZG2 is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Wizz Air Holdings and PT Bank Central in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PT Bank Central and Wizz 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 Wizz Air Holdings 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 Central has no effect on the direction of Wizz Air i.e., Wizz Air and PT Bank go up and down completely randomly.

Pair Corralation between Wizz Air and PT Bank

Assuming the 90 days trading horizon Wizz Air Holdings is expected to generate 1.02 times more return on investment than PT Bank. However, Wizz Air is 1.02 times more volatile than PT Bank Central. It trades about 0.1 of its potential returns per unit of risk. PT Bank Central is currently generating about -0.12 per unit of risk. If you would invest  1,746  in Wizz Air Holdings on December 21, 2024 and sell it today you would earn a total of  398.00  from holding Wizz Air Holdings or generate 22.79% return on investment over 90 days.

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

Wizz Air Holdings  vs.  PT Bank Central

Wizz Air Holdings

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Wizz Air Holdings are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Wizz Air unveiled solid returns over the last few months and may actually be approaching a breakup point.

PT Bank Central

Risk-Adjusted Performance

Very Weak

Over the last 90 days PT Bank Central has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's technical and fundamental 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 Wizz Air and PT Bank

The main advantage of trading using opposite Wizz Air and PT Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wizz 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 Wizz Air Holdings and PT Bank Central 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.