Correlation Between PT Bank and RATIONAL UNADR

Can any of the company-specific risk be diversified away by investing in both PT Bank and RATIONAL UNADR 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 RATIONAL UNADR 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 RATIONAL UNADR 1, you can compare the effects of market volatilities on PT Bank and RATIONAL UNADR 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 RATIONAL UNADR. Check out your portfolio center. Please also check ongoing floating volatility patterns of PT Bank and RATIONAL UNADR.

Diversification Opportunities for PT Bank and RATIONAL UNADR

0.61

Correlation Coefficient

PT Bank  RATIONAL UNADR

Poor diversification

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

Pair Corralation between PT Bank and RATIONAL UNADR

Assuming the 90 days trading horizon PT Bank Rakyat is expected to under-perform the RATIONAL UNADR. In addition to that, PT Bank is 3.38 times more volatile than RATIONAL UNADR 1. It trades about -0.05 of its total potential returns per unit of risk. RATIONAL UNADR 1 is currently generating about -0.06 per unit of volatility. If you would invest  4,320  in RATIONAL UNADR 1 on September 26, 2024 and sell it today you would lose (280.00) from holding RATIONAL UNADR 1 or give up 6.48% 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.  RATIONAL UNADR 1

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. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

RATIONAL UNADR 1

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days RATIONAL UNADR 1 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, RATIONAL UNADR 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 RATIONAL UNADR

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

The idea behind PT Bank Rakyat and RATIONAL UNADR 1 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.