Correlation Between PT Bank and Five Below

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

By analyzing existing cross correlation between PT Bank Mandiri and Five Below, you can compare the effects of market volatilities on PT Bank and Five Below 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 Five Below. Check out your portfolio center. Please also check ongoing floating volatility patterns of PT Bank and Five Below.

Diversification Opportunities for PT Bank and Five Below

-0.51

Correlation Coefficient

PT Bank  Five Below

Excellent diversification

The 3 months correlation between PQ9 and Five is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding PT Bank Mandiri and Five Below in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Five Below 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 Mandiri are associated (or correlated) with Five Below. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Five Below has no effect on the direction of PT Bank i.e., PT Bank and Five Below go up and down completely randomly.

Pair Corralation between PT Bank and Five Below

Assuming the 90 days horizon PT Bank Mandiri is expected to under-perform the Five Below. In addition to that, PT Bank is 1.68 times more volatile than Five Below. It trades about -0.06 of its total potential returns per unit of risk. Five Below is currently generating about 0.28 per unit of volatility. If you would invest  8,238  in Five Below on September 23, 2024 and sell it today you would earn a total of  1,857  from holding Five Below or generate 22.54% return on investment over 90 days.

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

PT Bank Mandiri  vs.  Five Below

PT Bank Mandiri

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PT Bank Mandiri has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile 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.

Five Below

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Five Below are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Five Below reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with PT Bank and Five Below

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

The idea behind PT Bank Mandiri and Five Below 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.