Correlation Between PT Bank and Borussia Dortmund

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

Diversification Opportunities for PT Bank and Borussia Dortmund

-0.78

Correlation Coefficient

PT Bank  Borussia Dortmund

Pay attention - limited upside

The 3 months correlation between BYRA and Borussia is -0.78. Overlapping area represents the amount of risk that can be diversified away by holding PT Bank Rakyat and Borussia Dortmund GmbH in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Borussia Dortmund GmbH 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 Borussia Dortmund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Borussia Dortmund GmbH has no effect on the direction of PT Bank i.e., PT Bank and Borussia Dortmund go up and down completely randomly.

Pair Corralation between PT Bank and Borussia Dortmund

Assuming the 90 days trading horizon PT Bank Rakyat is expected to under-perform the Borussia Dortmund. In addition to that, PT Bank is 2.49 times more volatile than Borussia Dortmund GmbH. It trades about -0.09 of its total potential returns per unit of risk. Borussia Dortmund GmbH is currently generating about 0.19 per unit of volatility. If you would invest  373.00  in Borussia Dortmund GmbH on February 22, 2024 and sell it today you would earn a total of  37.00  from holding Borussia Dortmund GmbH or generate 9.92% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	95.45%
Values	Daily Returns

PT Bank Rakyat  vs.  Borussia Dortmund GmbH

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.

Borussia Dortmund GmbH

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Borussia Dortmund GmbH are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain fundamental drivers, Borussia Dortmund displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with PT Bank and Borussia Dortmund

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

The idea behind PT Bank Rakyat and Borussia Dortmund GmbH 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.