Correlation Between PT Bank and ON THE

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

Diversification Opportunities for PT Bank and ON THE

-0.7

Correlation Coefficient

PT Bank  ON THE

Excellent diversification

The 3 months correlation between BYRA and 9BP is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding PT Bank Rakyat and ON THE BEACH in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ON THE BEACH 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 ON THE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ON THE BEACH has no effect on the direction of PT Bank i.e., PT Bank and ON THE go up and down completely randomly.

Pair Corralation between PT Bank and ON THE

Assuming the 90 days trading horizon PT Bank is expected to generate 1.13 times less return on investment than ON THE. In addition to that, PT Bank is 2.83 times more volatile than ON THE BEACH. It trades about 0.02 of its total potential returns per unit of risk. ON THE BEACH is currently generating about 0.08 per unit of volatility. If you would invest  165.00  in ON THE BEACH on September 3, 2024 and sell it today you would earn a total of  32.00  from holding ON THE BEACH or generate 19.39% 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.  ON THE BEACH

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 basic indicators, PT Bank is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

ON THE BEACH

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in ON THE BEACH are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, ON THE may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with PT Bank and ON THE

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

The idea behind PT Bank Rakyat and ON THE BEACH 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.