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 Mandiri 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

0.76

Correlation Coefficient

PT Bank  Calibre Mining

Poor diversification

The 3 months correlation between PQ9 and Calibre is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding PT Bank Mandiri 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 Mandiri 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 horizon PT Bank is expected to generate 3.76 times less return on investment than Calibre Mining. In addition to that, PT Bank is 1.77 times more volatile than Calibre Mining Corp. It trades about 0.05 of its total potential returns per unit of risk. Calibre Mining Corp is currently generating about 0.32 per unit of volatility. If you would invest  149.00  in Calibre Mining Corp on June 29, 2024 and sell it today you would earn a total of  26.00  from holding Calibre Mining Corp or generate 17.45% return on investment over 90 days.

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

PT Bank Mandiri  vs.  Calibre Mining Corp

PT Bank Mandiri

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in PT Bank Mandiri are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, PT Bank reported solid returns over the last few months and may actually be approaching a breakup point.

Calibre Mining Corp

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Calibre Mining Corp are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, Calibre Mining exhibited solid returns over the last few months and may actually be approaching a breakup point.

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 Mandiri 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.

Check out your portfolio center.

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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.