Correlation Between CaixaBank and PT Bank

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

By analyzing existing cross correlation between CaixaBank SA and PT Bank Rakyat, you can compare the effects of market volatilities on CaixaBank and PT Bank 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 CaixaBank with a short position of PT Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of CaixaBank and PT Bank.

Diversification Opportunities for CaixaBank and PT Bank

-0.07

Correlation Coefficient

CaixaBank  PT Bank

Good diversification

The 3 months correlation between CaixaBank and BKRKF is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding CaixaBank SA and PT Bank Rakyat in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PT Bank Rakyat and CaixaBank 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 CaixaBank SA are associated (or correlated) with PT Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PT Bank Rakyat has no effect on the direction of CaixaBank i.e., CaixaBank and PT Bank go up and down completely randomly.

Pair Corralation between CaixaBank and PT Bank

Assuming the 90 days horizon CaixaBank SA is expected to generate 0.63 times more return on investment than PT Bank. However, CaixaBank SA is 1.58 times less risky than PT Bank. It trades about 0.0 of its potential returns per unit of risk. PT Bank Rakyat is currently generating about -0.07 per unit of risk. If you would invest  535.00  in CaixaBank SA on September 2, 2024 and sell it today you would lose (20.00) from holding CaixaBank SA or give up 3.74% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	96.88%
Values	Daily Returns

CaixaBank SA  vs.  PT Bank Rakyat

CaixaBank SA

Risk-Adjusted Performance

0 of 100

Very Weak

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

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 weak performance in the last few months, the Stock's forward-looking signals 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 CaixaBank and PT Bank

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

The idea behind CaixaBank SA and PT Bank Rakyat 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.

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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.