Correlation Between Bank Permata and Alumindo Light

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

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

Diversification Opportunities for Bank Permata and Alumindo Light

0.0

Correlation Coefficient

Bank Permata  Alumindo Light

Pay attention - limited upside

The 3 months correlation between Bank and Alumindo is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Bank Permata Tbk and Alumindo Light Metal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alumindo Light Metal and Bank Permata 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 Bank Permata Tbk are associated (or correlated) with Alumindo Light. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alumindo Light Metal has no effect on the direction of Bank Permata i.e., Bank Permata and Alumindo Light go up and down completely randomly.

Pair Corralation between Bank Permata and Alumindo Light

If you would invest (100.00) in Bank Permata Tbk on February 23, 2024 and sell it today you would earn a total of  100.00  from holding Bank Permata Tbk or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Bank Permata Tbk  vs.  Alumindo Light Metal

Bank Permata Tbk

Risk-Adjusted Performance

0 of 100

Very Weak

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

Alumindo Light Metal

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Alumindo Light Metal 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 quite persistent which may send shares a bit higher in June 2024. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Bank Permata and Alumindo Light

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

The idea behind Bank Permata Tbk and Alumindo Light Metal 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.