Correlation Between PT Bank and BROADWIND ENRGY
Can any of the company-specific risk be diversified away by investing in both PT Bank and BROADWIND ENRGY 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 BROADWIND ENRGY 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 BROADWIND ENRGY, you can compare the effects of market volatilities on PT Bank and BROADWIND ENRGY 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 BROADWIND ENRGY. Check out your portfolio center. Please also check ongoing floating volatility patterns of PT Bank and BROADWIND ENRGY.
Diversification Opportunities for PT Bank and BROADWIND ENRGY
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between BYRA and BROADWIND is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding PT Bank Rakyat and BROADWIND ENRGY in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BROADWIND ENRGY 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 BROADWIND ENRGY. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BROADWIND ENRGY has no effect on the direction of PT Bank i.e., PT Bank and BROADWIND ENRGY go up and down completely randomly.
Pair Corralation between PT Bank and BROADWIND ENRGY
Assuming the 90 days trading horizon PT Bank Rakyat is expected to under-perform the BROADWIND ENRGY. In addition to that, PT Bank is 1.18 times more volatile than BROADWIND ENRGY. It trades about -0.04 of its total potential returns per unit of risk. BROADWIND ENRGY is currently generating about -0.04 per unit of volatility. If you would invest 197.00 in BROADWIND ENRGY on September 12, 2024 and sell it today you would lose (29.00) from holding BROADWIND ENRGY or give up 14.72% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
PT Bank Rakyat vs. BROADWIND ENRGY
Performance |
Timeline |
PT Bank Rakyat |
BROADWIND ENRGY |
PT Bank and BROADWIND ENRGY Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with PT Bank and BROADWIND ENRGY
The main advantage of trading using opposite PT Bank and BROADWIND ENRGY positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PT Bank position performs unexpectedly, BROADWIND ENRGY 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 BROADWIND ENRGY will offset losses from the drop in BROADWIND ENRGY's long position.PT Bank vs. China Merchants Bank | PT Bank vs. HDFC Bank Limited | PT Bank vs. ICICI Bank Limited | PT Bank vs. PT Bank Central |
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Check out your portfolio center.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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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