Correlation Between PT Bank and Yellow Pages

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

Diversification Opportunities for PT Bank and Yellow Pages

-0.7

Correlation Coefficient

PT Bank  Yellow Pages

Excellent diversification

The 3 months correlation between PBCRF and Yellow is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding PT Bank Central and Yellow Pages Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Yellow Pages Limited 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 Yellow Pages. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Yellow Pages Limited has no effect on the direction of PT Bank i.e., PT Bank and Yellow Pages go up and down completely randomly.

Pair Corralation between PT Bank and Yellow Pages

Assuming the 90 days horizon PT Bank Central is expected to under-perform the Yellow Pages. In addition to that, PT Bank is 4.38 times more volatile than Yellow Pages Limited. It trades about -0.05 of its total potential returns per unit of risk. Yellow Pages Limited is currently generating about 0.33 per unit of volatility. If you would invest  744.00  in Yellow Pages Limited on September 22, 2024 and sell it today you would earn a total of  46.00  from holding Yellow Pages Limited or generate 6.18% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	95.45%
Values	Daily Returns

PT Bank Central  vs.  Yellow Pages Limited

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 weak 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.

Yellow Pages Limited

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Yellow Pages Limited are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile fundamental indicators, Yellow Pages may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with PT Bank and Yellow Pages

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

The idea behind PT Bank Central and Yellow Pages Limited 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.