Correlation Between Pacific Strategic and Bank Central
Can any of the company-specific risk be diversified away by investing in both Pacific Strategic and Bank Central 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 Pacific Strategic and Bank Central into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pacific Strategic Financial and Bank Central Asia, you can compare the effects of market volatilities on Pacific Strategic and Bank Central 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 Pacific Strategic with a short position of Bank Central. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pacific Strategic and Bank Central.
Diversification Opportunities for Pacific Strategic and Bank Central
-0.61 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Pacific and Bank is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Pacific Strategic Financial and Bank Central Asia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bank Central Asia and Pacific Strategic 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 Pacific Strategic Financial are associated (or correlated) with Bank Central. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bank Central Asia has no effect on the direction of Pacific Strategic i.e., Pacific Strategic and Bank Central go up and down completely randomly.
Pair Corralation between Pacific Strategic and Bank Central
Assuming the 90 days trading horizon Pacific Strategic Financial is expected to generate 0.63 times more return on investment than Bank Central. However, Pacific Strategic Financial is 1.59 times less risky than Bank Central. It trades about 0.21 of its potential returns per unit of risk. Bank Central Asia is currently generating about -0.02 per unit of risk. If you would invest 106,500 in Pacific Strategic Financial on January 26, 2024 and sell it today you would earn a total of 4,500 from holding Pacific Strategic Financial or generate 4.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pacific Strategic Financial vs. Bank Central Asia
Performance |
| Timeline |
| Pacific Strategic |
| Bank Central Asia |
Pacific Strategic and Bank Central Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pacific Strategic and Bank Central
The main advantage of trading using opposite Pacific Strategic and Bank Central positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pacific Strategic position performs unexpectedly, Bank Central 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 Bank Central will offset losses from the drop in Bank Central's long position.| Pacific Strategic vs. Astra International Tbk | Pacific Strategic vs. United Tractors Tbk | Pacific Strategic vs. Bukit Asam Tbk | Pacific Strategic vs. Indofood Sukses Makmur |
| Bank Central vs. Astra International Tbk | Bank Central vs. United Tractors Tbk | Bank Central vs. Bukit Asam Tbk | Bank Central vs. Indofood Sukses Makmur |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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