Correlation Between PT Bank and SimCorp AS

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

Diversification Opportunities for PT Bank and SimCorp AS

-0.39

Correlation Coefficient

PT Bank  SimCorp AS

Very good diversification

The 3 months correlation between BKRKF and SimCorp is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding PT Bank Rakyat and SimCorp AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SimCorp AS 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 SimCorp AS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SimCorp AS has no effect on the direction of PT Bank i.e., PT Bank and SimCorp AS go up and down completely randomly.

Pair Corralation between PT Bank and SimCorp AS

If you would invest  25.00  in PT Bank Rakyat on September 16, 2024 and sell it today you would earn a total of  1.00  from holding PT Bank Rakyat or generate 4.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	4.76%
Values	Daily Returns

PT Bank Rakyat  vs.  SimCorp AS

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 weak 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.

SimCorp AS

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SimCorp AS has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, SimCorp AS 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 SimCorp AS

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

The idea behind PT Bank Rakyat and SimCorp AS 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .