Correlation Between PT Bank and First Physicians

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

Diversification Opportunities for PT Bank and First Physicians

0.0

Correlation Coefficient

PT Bank  First Physicians

Pay attention - limited upside

The 3 months correlation between BKRKF and First is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding PT Bank Rakyat and First Physicians Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Physicians Capital 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 First Physicians. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Physicians Capital has no effect on the direction of PT Bank i.e., PT Bank and First Physicians go up and down completely randomly.

Pair Corralation between PT Bank and First Physicians

If you would invest  32.00  in PT Bank Rakyat on September 12, 2024 and sell it today you would lose (3.00) from holding PT Bank Rakyat or give up 9.38% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

PT Bank Rakyat  vs.  First Physicians Capital

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 nearly stable forward-looking signals, PT Bank is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

First Physicians Capital

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days First Physicians Capital has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable fundamental indicators, First Physicians is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with PT Bank and First Physicians

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

The idea behind PT Bank Rakyat and First Physicians Capital 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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.