Correlation Between PT Bank and Prosafe SE

Can any of the company-specific risk be diversified away by investing in both PT Bank and Prosafe SE 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 Prosafe SE into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between PT Bank Maybank and Prosafe SE, you can compare the effects of market volatilities on PT Bank and Prosafe SE 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 Prosafe SE. Check out your portfolio center. Please also check ongoing floating volatility patterns of PT Bank and Prosafe SE.

Diversification Opportunities for PT Bank and Prosafe SE

0.37

Correlation Coefficient

PT Bank  Prosafe SE

Weak diversification

The 3 months correlation between BOZA and Prosafe is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding PT Bank Maybank and Prosafe SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prosafe SE 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 Maybank are associated (or correlated) with Prosafe SE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Prosafe SE has no effect on the direction of PT Bank i.e., PT Bank and Prosafe SE go up and down completely randomly.

Pair Corralation between PT Bank and Prosafe SE

Assuming the 90 days trading horizon PT Bank Maybank is expected to generate 0.97 times more return on investment than Prosafe SE. However, PT Bank Maybank is 1.03 times less risky than Prosafe SE. It trades about 0.02 of its potential returns per unit of risk. Prosafe SE is currently generating about -0.1 per unit of risk. If you would invest  1.30  in PT Bank Maybank on September 21, 2024 and sell it today you would lose (0.15) from holding PT Bank Maybank or give up 11.54% of portfolio value over 90 days.

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

PT Bank Maybank  vs.  Prosafe SE

PT Bank Maybank

Risk-Adjusted Performance

0 of 100

Insignificant

Over the last 90 days PT Bank Maybank has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, PT Bank is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Prosafe SE

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Prosafe SE has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's basic indicators 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.

Pair Trading with PT Bank and Prosafe SE

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

The idea behind PT Bank Maybank and Prosafe SE 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 .