Correlation Between PT Bank and Industrial Tech

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

Diversification Opportunities for PT Bank and Industrial Tech

-0.55

Correlation Coefficient

PT Bank  Industrial Tech

Excellent diversification

The 3 months correlation between BKRKF and Industrial is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding PT Bank Rakyat and Industrial Tech Acquisitions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Industrial Tech Acqu 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 Industrial Tech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Industrial Tech Acqu has no effect on the direction of PT Bank i.e., PT Bank and Industrial Tech go up and down completely randomly.

Pair Corralation between PT Bank and Industrial Tech

If you would invest  1,062  in Industrial Tech Acquisitions on September 3, 2024 and sell it today you would earn a total of  0.00  from holding Industrial Tech Acquisitions or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	1.56%
Values	Daily Returns

PT Bank Rakyat  vs.  Industrial Tech Acquisitions

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 fragile performance in the last few months, the Stock's forward-looking signals remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Industrial Tech Acqu

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Industrial Tech Acquisitions has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Industrial Tech is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with PT Bank and Industrial Tech

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

The idea behind PT Bank Rakyat and Industrial Tech Acquisitions 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.