Correlation Between PT Bank and Calibre Mining

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

Diversification Opportunities for PT Bank and Calibre Mining

-0.38

Correlation Coefficient

PT Bank  Calibre Mining

Very good diversification

The 3 months correlation between BYRA and Calibre is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding PT Bank Rakyat and Calibre Mining Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Calibre Mining Corp 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 Calibre Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Calibre Mining Corp has no effect on the direction of PT Bank i.e., PT Bank and Calibre Mining go up and down completely randomly.

Pair Corralation between PT Bank and Calibre Mining

Assuming the 90 days trading horizon PT Bank Rakyat is expected to generate 2.23 times more return on investment than Calibre Mining. However, PT Bank is 2.23 times more volatile than Calibre Mining Corp. It trades about 0.01 of its potential returns per unit of risk. Calibre Mining Corp is currently generating about -0.27 per unit of risk. If you would invest  26.00  in PT Bank Rakyat on March 28, 2024 and sell it today you would lose (1.00) from holding PT Bank Rakyat or give up 3.85% of portfolio value over 90 days.

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

PT Bank Rakyat  vs.  Calibre Mining Corp

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 weak performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in July 2024. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Calibre Mining Corp

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Calibre Mining Corp are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain basic indicators, Calibre Mining may actually be approaching a critical reversion point that can send shares even higher in July 2024.

Pair Trading with PT Bank and Calibre Mining

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

The idea behind PT Bank Rakyat and Calibre Mining Corp 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.