Correlation Between PT Bank and Embracer Group

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

Diversification Opportunities for PT Bank and Embracer Group

-0.34

Correlation Coefficient

PT Bank  Embracer Group

Very good diversification

The 3 months correlation between BKRKF and Embracer is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding PT Bank Rakyat and Embracer Group AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Embracer Group AB 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 Embracer Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Embracer Group AB has no effect on the direction of PT Bank i.e., PT Bank and Embracer Group go up and down completely randomly.

Pair Corralation between PT Bank and Embracer Group

Assuming the 90 days horizon PT Bank Rakyat is expected to under-perform the Embracer Group. In addition to that, PT Bank is 2.16 times more volatile than Embracer Group AB. It trades about -0.07 of its total potential returns per unit of risk. Embracer Group AB is currently generating about 0.07 per unit of volatility. If you would invest  241.00  in Embracer Group AB on September 4, 2024 and sell it today you would earn a total of  22.00  from holding Embracer Group AB or generate 9.13% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

PT Bank Rakyat  vs.  Embracer Group AB

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.

Embracer Group AB

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Embracer Group AB are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Embracer Group may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with PT Bank and Embracer Group

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

The idea behind PT Bank Rakyat and Embracer Group AB 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..