Correlation Between PT Bank and Intact Financial

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

Diversification Opportunities for PT Bank and Intact Financial

-0.3

Correlation Coefficient

PT Bank  Intact Financial

Very good diversification

The 3 months correlation between BKRKF and Intact is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding PT Bank Rakyat and Intact Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Intact Financial 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 Intact Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Intact Financial has no effect on the direction of PT Bank i.e., PT Bank and Intact Financial go up and down completely randomly.

Pair Corralation between PT Bank and Intact Financial

Assuming the 90 days horizon PT Bank Rakyat is expected to under-perform the Intact Financial. In addition to that, PT Bank is 5.94 times more volatile than Intact Financial. It trades about -0.03 of its total potential returns per unit of risk. Intact Financial is currently generating about 0.01 per unit of volatility. If you would invest  18,444  in Intact Financial on September 15, 2024 and sell it today you would earn a total of  51.00  from holding Intact Financial or generate 0.28% return on investment over 90 days.

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

PT Bank Rakyat  vs.  Intact Financial

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 fragile 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.

Intact Financial

Risk-Adjusted Performance

0 of 100

Weak

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

Pair Trading with PT Bank and Intact Financial

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

The idea behind PT Bank Rakyat and Intact Financial 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.