Correlation Between PT Bank and Alpha Bank

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

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

Diversification Opportunities for PT Bank and Alpha Bank

0.36

Correlation Coefficient

PT Bank  Alpha Bank

Weak diversification

The 3 months correlation between PBCRF and Alpha is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding PT Bank Central and Alpha Bank SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alpha Bank SA 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 Central are associated (or correlated) with Alpha Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alpha Bank SA has no effect on the direction of PT Bank i.e., PT Bank and Alpha Bank go up and down completely randomly.

Pair Corralation between PT Bank and Alpha Bank

Assuming the 90 days horizon PT Bank Central is expected to generate 0.85 times more return on investment than Alpha Bank. However, PT Bank Central is 1.18 times less risky than Alpha Bank. It trades about 0.04 of its potential returns per unit of risk. Alpha Bank SA is currently generating about -0.04 per unit of risk. If you would invest  66.00  in PT Bank Central on September 2, 2024 and sell it today you would earn a total of  1.00  from holding PT Bank Central or generate 1.52% return on investment over 90 days.

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

PT Bank Central  vs.  Alpha Bank SA

PT Bank Central

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in PT Bank Central are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, PT Bank is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Alpha Bank SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Alpha Bank SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's forward-looking signals remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with PT Bank and Alpha Bank

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

The idea behind PT Bank Central and Alpha Bank SA 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.