Correlation Between PT Bank and Centene Corp

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

Diversification Opportunities for PT Bank and Centene Corp

0.56
  Correlation Coefficient

Very weak diversification

The 3 months correlation between BKRKF and Centene is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding PT Bank Rakyat and Centene Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Centene 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 Centene Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Centene Corp has no effect on the direction of PT Bank i.e., PT Bank and Centene Corp go up and down completely randomly.

Pair Corralation between PT Bank and Centene Corp

Assuming the 90 days horizon PT Bank Rakyat is expected to generate 2.36 times more return on investment than Centene Corp. However, PT Bank is 2.36 times more volatile than Centene Corp. It trades about 0.2 of its potential returns per unit of risk. Centene Corp is currently generating about 0.09 per unit of risk. If you would invest  27.00  in PT Bank Rakyat on September 10, 2022 and sell it today you would earn a total of  4.00  from holding PT Bank Rakyat or generate 14.81% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

PT Bank Rakyat  vs.  Centene Corp

 Performance (%) 
       Timeline  
PT Bank Rakyat 
BKRKF Performance
4 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in PT Bank Rakyat are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady forward-looking signals, PT Bank exhibited solid returns over the last few months and may actually be approaching a breakup point.

BKRKF Price Channel

Centene Corp 
Centene Performance
0 of 100
Over the last 90 days Centene Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Centene Corp is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Centene Price Channel

PT Bank and Centene Corp Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with PT Bank and Centene Corp

The main advantage of trading using opposite PT Bank and Centene Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PT Bank position performs unexpectedly, Centene Corp 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 Centene Corp will offset losses from the drop in Centene Corp's long position.
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The idea behind PT Bank Rakyat and Centene 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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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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.

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