Correlation Between PT Bank and CF Acquisition

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

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

Diversification Opportunities for PT Bank and CF Acquisition

-0.71

Correlation Coefficient

PT Bank  CF Acquisition

Pay attention - limited upside

The 3 months correlation between BKRKF and CFIV is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding PT Bank Rakyat and CF Acquisition IV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CF Acquisition IV and PT Bank 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 PT Bank Rakyat are associated (or correlated) with CF Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CF Acquisition IV has no effect on the direction of PT Bank i.e., PT Bank and CF Acquisition go up and down completely randomly.

Pair Corralation between PT Bank and CF Acquisition

If you would invest  27.00  in PT Bank Rakyat on September 17, 2024 and sell it today you would lose (1.00) from holding PT Bank Rakyat or give up 3.7% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	5.0%
Values	Daily Returns

PT Bank Rakyat  vs.  CF Acquisition IV

PT Bank Rakyat

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PT Bank Rakyat has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's forward-looking signals remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

CF Acquisition IV

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CF Acquisition IV has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable forward indicators, CF Acquisition is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with PT Bank and CF Acquisition

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

The idea behind PT Bank Rakyat and CF Acquisition IV 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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.