Correlation Between PT Bank and F5 Networks

Can any of the company-specific risk be diversified away by investing in both PT Bank and F5 Networks 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 F5 Networks 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 F5 Networks, you can compare the effects of market volatilities on PT Bank and F5 Networks 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 F5 Networks. Check out your portfolio center. Please also check ongoing floating volatility patterns of PT Bank and F5 Networks.

Diversification Opportunities for PT Bank and F5 Networks

-0.83

Correlation Coefficient

PT Bank  F5 Networks

Pay attention - limited upside

The 3 months correlation between BKRKF and FFIV is -0.83. Overlapping area represents the amount of risk that can be diversified away by holding PT Bank Rakyat and F5 Networks in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on F5 Networks 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 F5 Networks. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of F5 Networks has no effect on the direction of PT Bank i.e., PT Bank and F5 Networks go up and down completely randomly.

Pair Corralation between PT Bank and F5 Networks

Assuming the 90 days horizon PT Bank Rakyat is expected to under-perform the F5 Networks. In addition to that, PT Bank is 3.42 times more volatile than F5 Networks. It trades about -0.06 of its total potential returns per unit of risk. F5 Networks is currently generating about 0.24 per unit of volatility. If you would invest  19,885  in F5 Networks on September 1, 2024 and sell it today you would earn a total of  5,150  from holding F5 Networks or generate 25.9% return on investment over 90 days.

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

PT Bank Rakyat  vs.  F5 Networks

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 weak performance in the last few months, the Stock's forward-looking signals remain nearly stable which may send shares a bit higher in December 2024. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

F5 Networks

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in F5 Networks are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating forward indicators, F5 Networks showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with PT Bank and F5 Networks

The main advantage of trading using opposite PT Bank and F5 Networks positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PT Bank position performs unexpectedly, F5 Networks 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 F5 Networks will offset losses from the drop in F5 Networks' long position.

The idea behind PT Bank Rakyat and F5 Networks 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 Anywhere module to track or share privately all of your investments from the convenience of any device.