Correlation Between Heartland Financial and PT Bank

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

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

Diversification Opportunities for Heartland Financial and PT Bank

-0.45

Correlation Coefficient

Heartland Financial  PT Bank

Very good diversification

The 3 months correlation between Heartland and BOZA is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Heartland Financial USA and PT Bank Maybank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PT Bank Maybank and Heartland Financial 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 Heartland Financial USA 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 Maybank has no effect on the direction of Heartland Financial i.e., Heartland Financial and PT Bank go up and down completely randomly.

Pair Corralation between Heartland Financial and PT Bank

Assuming the 90 days horizon Heartland Financial USA is expected to generate 0.55 times more return on investment than PT Bank. However, Heartland Financial USA is 1.81 times less risky than PT Bank. It trades about 0.18 of its potential returns per unit of risk. PT Bank Maybank is currently generating about 0.01 per unit of risk. If you would invest  4,976  in Heartland Financial USA on September 3, 2024 and sell it today you would earn a total of  1,374  from holding Heartland Financial USA or generate 27.61% return on investment over 90 days.

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

Heartland Financial USA  vs.  PT Bank Maybank

Heartland Financial USA

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Heartland Financial USA are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Heartland Financial reported solid returns over the last few months and may actually be approaching a breakup point.

PT Bank Maybank

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PT Bank Maybank 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 current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Heartland Financial and PT Bank

The main advantage of trading using opposite Heartland Financial and PT Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Heartland Financial 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 Heartland Financial USA and PT Bank Maybank 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 Commodity Directory module to find actively traded commodities issued by global exchanges.