Correlation Between VR Resources and PT Bank

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

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

Diversification Opportunities for VR Resources and PT Bank

-0.57

Correlation Coefficient

VR Resources  PT Bank

Excellent diversification

The 3 months correlation between 5VR and NKX is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding VR Resources 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 VR Resources 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 VR Resources 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 VR Resources i.e., VR Resources and PT Bank go up and down completely randomly.

Pair Corralation between VR Resources and PT Bank

Assuming the 90 days trading horizon VR Resources is expected to generate 56.47 times more return on investment than PT Bank. However, VR Resources is 56.47 times more volatile than PT Bank CIMB. It trades about 0.12 of its potential returns per unit of risk. PT Bank CIMB is currently generating about 0.01 per unit of risk. If you would invest  3.60  in VR Resources on March 23, 2025 and sell it today you would lose (2.45) from holding VR Resources or give up 68.06% of portfolio value over 90 days.

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

VR Resources  vs.  PT Bank CIMB

VR Resources

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in VR Resources are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, VR Resources unveiled solid returns over the last few months and may actually be approaching a breakup point.

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 18 (%) 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 newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with VR Resources and PT Bank

The main advantage of trading using opposite VR Resources and PT Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if VR Resources 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 VR Resources 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.