Correlation Between PT Bank and Britvic Plc

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

Diversification Opportunities for PT Bank and Britvic Plc

-0.47

Correlation Coefficient

PT Bank  Britvic Plc

Very good diversification

The 3 months correlation between BYRA and Britvic is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding PT Bank Rakyat and Britvic plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Britvic plc 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 Britvic Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Britvic plc has no effect on the direction of PT Bank i.e., PT Bank and Britvic Plc go up and down completely randomly.

Pair Corralation between PT Bank and Britvic Plc

Assuming the 90 days trading horizon PT Bank Rakyat is expected to under-perform the Britvic Plc. In addition to that, PT Bank is 11.57 times more volatile than Britvic plc. It trades about -0.02 of its total potential returns per unit of risk. Britvic plc is currently generating about 0.11 per unit of volatility. If you would invest  1,490  in Britvic plc on September 3, 2024 and sell it today you would earn a total of  40.00  from holding Britvic plc or generate 2.68% return on investment over 90 days.

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

PT Bank Rakyat  vs.  Britvic plc

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.

Britvic plc

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Britvic plc are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Britvic Plc is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with PT Bank and Britvic Plc

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

The idea behind PT Bank Rakyat and Britvic plc 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.