Correlation Between Victoria Insurance and PT Bank

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

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

Diversification Opportunities for Victoria Insurance and PT Bank

0.24

Correlation Coefficient

Victoria Insurance  PT Bank

Modest diversification

The 3 months correlation between Victoria and BBSI is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Victoria Insurance Tbk and PT Bank Bisnis in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PT Bank Bisnis and Victoria Insurance 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 Victoria Insurance Tbk 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 Bisnis has no effect on the direction of Victoria Insurance i.e., Victoria Insurance and PT Bank go up and down completely randomly.

Pair Corralation between Victoria Insurance and PT Bank

Assuming the 90 days trading horizon Victoria Insurance Tbk is expected to under-perform the PT Bank. In addition to that, Victoria Insurance is 1.15 times more volatile than PT Bank Bisnis. It trades about -0.11 of its total potential returns per unit of risk. PT Bank Bisnis is currently generating about -0.01 per unit of volatility. If you would invest  425,000  in PT Bank Bisnis on September 14, 2024 and sell it today you would lose (5,000) from holding PT Bank Bisnis or give up 1.18% of portfolio value over 90 days.

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

Victoria Insurance Tbk  vs.  PT Bank Bisnis

Victoria Insurance Tbk

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Victoria Insurance Tbk has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's forward-looking signals remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

PT Bank Bisnis

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PT Bank Bisnis has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent forward-looking signals, PT Bank is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Victoria Insurance and PT Bank

The main advantage of trading using opposite Victoria Insurance and PT Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Victoria Insurance 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 Victoria Insurance Tbk and PT Bank Bisnis 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.