Correlation Between PT Bank and PacifiCorp

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

Diversification Opportunities for PT Bank and PacifiCorp

-0.68

Correlation Coefficient

PT Bank  PacifiCorp

Excellent diversification

The 3 months correlation between BKRKF and PacifiCorp is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding PT Bank Rakyat and PacifiCorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PacifiCorp 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 PacifiCorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PacifiCorp has no effect on the direction of PT Bank i.e., PT Bank and PacifiCorp go up and down completely randomly.

Pair Corralation between PT Bank and PacifiCorp

Assuming the 90 days horizon PT Bank Rakyat is expected to under-perform the PacifiCorp. But the pink sheet apears to be less risky and, when comparing its historical volatility, PT Bank Rakyat is 1.03 times less risky than PacifiCorp. The pink sheet trades about -0.08 of its potential returns per unit of risk. The PacifiCorp is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  10,504  in PacifiCorp on September 5, 2024 and sell it today you would earn a total of  2,991  from holding PacifiCorp or generate 28.47% return on investment over 90 days.

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

PT Bank Rakyat  vs.  PacifiCorp

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 January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

PacifiCorp

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in PacifiCorp are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very weak essential indicators, PacifiCorp displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with PT Bank and PacifiCorp

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

The idea behind PT Bank Rakyat and PacifiCorp 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.