Correlation Between PT Bank and Li Ning
Can any of the company-specific risk be diversified away by investing in both PT Bank and Li Ning 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 Li Ning 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 Li Ning Company, you can compare the effects of market volatilities on PT Bank and Li Ning 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 Li Ning. Check out your portfolio center. Please also check ongoing floating volatility patterns of PT Bank and Li Ning.
Diversification Opportunities for PT Bank and Li Ning
Very good diversification
The 3 months correlation between BKRKF and LNNGF is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding PT Bank Rakyat and Li Ning Company in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Li Ning Company 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 Li Ning. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Li Ning Company has no effect on the direction of PT Bank i.e., PT Bank and Li Ning go up and down completely randomly.
Pair Corralation between PT Bank and Li Ning
Assuming the 90 days horizon PT Bank Rakyat is expected to under-perform the Li Ning. In addition to that, PT Bank is 1.07 times more volatile than Li Ning Company. It trades about -0.07 of its total potential returns per unit of risk. Li Ning Company is currently generating about 0.07 per unit of volatility. If you would invest 180.00 in Li Ning Company on September 4, 2024 and sell it today you would earn a total of 27.00 from holding Li Ning Company or generate 15.0% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
PT Bank Rakyat vs. Li Ning Company
Performance |
Timeline |
PT Bank Rakyat |
Li Ning Company |
PT Bank and Li Ning Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with PT Bank and Li Ning
The main advantage of trading using opposite PT Bank and Li Ning positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PT Bank position performs unexpectedly, Li Ning 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 Li Ning will offset losses from the drop in Li Ning's long position.PT Bank vs. First Hawaiian | PT Bank vs. Central Pacific Financial | PT Bank vs. Territorial Bancorp | PT Bank vs. Comerica |
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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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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