Correlation Between PT Bank and Univec

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

Diversification Opportunities for PT Bank and Univec

0.61

Correlation Coefficient

PT Bank  Univec

Poor diversification

The 3 months correlation between BKRKF and Univec is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding PT Bank Rakyat and Univec Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Univec Inc 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 Univec. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Univec Inc has no effect on the direction of PT Bank i.e., PT Bank and Univec go up and down completely randomly.

Pair Corralation between PT Bank and Univec

Assuming the 90 days horizon PT Bank Rakyat is expected to generate 0.69 times more return on investment than Univec. However, PT Bank Rakyat is 1.45 times less risky than Univec. It trades about 0.05 of its potential returns per unit of risk. Univec Inc is currently generating about -0.03 per unit of risk. If you would invest  24.00  in PT Bank Rakyat on September 12, 2024 and sell it today you would earn a total of  5.00  from holding PT Bank Rakyat or generate 20.83% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	99.2%
Values	Daily Returns

PT Bank Rakyat  vs.  Univec Inc

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 nearly stable forward-looking signals, PT Bank is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Univec Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Univec Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with PT Bank and Univec

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

The idea behind PT Bank Rakyat and Univec Inc 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 Commodity Directory module to find actively traded commodities issued by global exchanges.