Correlation Between PT Bank and Nongfu Spring

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

Diversification Opportunities for PT Bank and Nongfu Spring

-0.43

Correlation Coefficient

PT Bank  Nongfu Spring

Very good diversification

The 3 months correlation between PBCRF and Nongfu is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding PT Bank Central and Nongfu Spring Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nongfu Spring 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 Nongfu Spring. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nongfu Spring has no effect on the direction of PT Bank i.e., PT Bank and Nongfu Spring go up and down completely randomly.

Pair Corralation between PT Bank and Nongfu Spring

Assuming the 90 days horizon PT Bank Central is expected to under-perform the Nongfu Spring. In addition to that, PT Bank is 1.25 times more volatile than Nongfu Spring Co. It trades about -0.07 of its total potential returns per unit of risk. Nongfu Spring Co is currently generating about 0.22 per unit of volatility. If you would invest  389.00  in Nongfu Spring Co on September 24, 2024 and sell it today you would earn a total of  53.00  from holding Nongfu Spring Co or generate 13.62% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	95.24%
Values	Daily Returns

PT Bank Central  vs.  Nongfu Spring Co

PT Bank Central

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PT Bank Central has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's basic indicators 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.

Nongfu Spring

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Nongfu Spring Co are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly unfluctuating basic indicators, Nongfu Spring reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with PT Bank and Nongfu Spring

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

The idea behind PT Bank Central and Nongfu Spring Co 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.