Correlation Between PT Bank and Alaska Air

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

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

Diversification Opportunities for PT Bank and Alaska Air

-0.69

Correlation Coefficient

PT Bank  Alaska Air

Excellent diversification

The 3 months correlation between BYRA and Alaska is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding PT Bank Rakyat and Alaska Air Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alaska Air Group 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 Rakyat are associated (or correlated) with Alaska Air. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alaska Air Group has no effect on the direction of PT Bank i.e., PT Bank and Alaska Air go up and down completely randomly.

Pair Corralation between PT Bank and Alaska Air

Assuming the 90 days trading horizon PT Bank Rakyat is expected to under-perform the Alaska Air. In addition to that, PT Bank is 3.62 times more volatile than Alaska Air Group. It trades about -0.07 of its total potential returns per unit of risk. Alaska Air Group is currently generating about 0.09 per unit of volatility. If you would invest  3,552  in Alaska Air Group on February 26, 2024 and sell it today you would earn a total of  350.00  from holding Alaska Air Group or generate 9.85% return on investment over 90 days.

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

PT Bank Rakyat  vs.  Alaska Air Group

PT Bank Rakyat

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PT Bank Rakyat 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 June 2024. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Alaska Air Group

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Alaska Air Group are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Alaska Air may actually be approaching a critical reversion point that can send shares even higher in June 2024.

Pair Trading with PT Bank and Alaska Air

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

The idea behind PT Bank Rakyat and Alaska Air Group 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.