Correlation Between TRAINLINE PLC and PT Bank

Can any of the company-specific risk be diversified away by investing in both TRAINLINE PLC and PT Bank 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 TRAINLINE PLC and PT Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between TRAINLINE PLC LS and PT Bank CIMB, you can compare the effects of market volatilities on TRAINLINE PLC and PT Bank 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 TRAINLINE PLC with a short position of PT Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of TRAINLINE PLC and PT Bank.

Diversification Opportunities for TRAINLINE PLC and PT Bank

-0.04

Correlation Coefficient

TRAINLINE PLC  PT Bank

Good diversification

The 3 months correlation between TRAINLINE and NKX is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding TRAINLINE PLC LS and PT Bank CIMB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PT Bank CIMB and TRAINLINE PLC 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 TRAINLINE PLC LS are associated (or correlated) with PT Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PT Bank CIMB has no effect on the direction of TRAINLINE PLC i.e., TRAINLINE PLC and PT Bank go up and down completely randomly.

Pair Corralation between TRAINLINE PLC and PT Bank

Assuming the 90 days trading horizon TRAINLINE PLC is expected to generate 2.73 times less return on investment than PT Bank. In addition to that, TRAINLINE PLC is 9.16 times more volatile than PT Bank CIMB. It trades about 0.01 of its total potential returns per unit of risk. PT Bank CIMB is currently generating about 0.18 per unit of volatility. If you would invest  8.75  in PT Bank CIMB on March 30, 2025 and sell it today you would earn a total of  0.35  from holding PT Bank CIMB or generate 4.0% return on investment over 90 days.

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

TRAINLINE PLC LS  vs.  PT Bank CIMB

TRAINLINE PLC LS

Risk-Adjusted Performance

Very Weak

Over the last 90 days TRAINLINE PLC LS has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, TRAINLINE PLC is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

PT Bank CIMB

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in PT Bank CIMB are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, PT Bank is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with TRAINLINE PLC and PT Bank

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

The idea behind TRAINLINE PLC LS and PT Bank CIMB 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.