Correlation Between Adaro Energy and Bank Negara
Can any of the company-specific risk be diversified away by investing in both Adaro Energy and Bank Negara 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 Adaro Energy and Bank Negara into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Adaro Energy Tbk and Bank Negara Indonesia, you can compare the effects of market volatilities on Adaro Energy and Bank Negara 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 Adaro Energy with a short position of Bank Negara. Check out your portfolio center. Please also check ongoing floating volatility patterns of Adaro Energy and Bank Negara.
Diversification Opportunities for Adaro Energy and Bank Negara
-0.7 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Adaro and Bank is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Adaro Energy Tbk and Bank Negara Indonesia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bank Negara Indonesia and Adaro Energy 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 Adaro Energy Tbk are associated (or correlated) with Bank Negara. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bank Negara Indonesia has no effect on the direction of Adaro Energy i.e., Adaro Energy and Bank Negara go up and down completely randomly.
Pair Corralation between Adaro Energy and Bank Negara
Assuming the 90 days trading horizon Adaro Energy Tbk is expected to under-perform the Bank Negara. But the stock apears to be less risky and, when comparing its historical volatility, Adaro Energy Tbk is 1.32 times less risky than Bank Negara. The stock trades about -0.27 of its potential returns per unit of risk. The Bank Negara Indonesia is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 459,000 in Bank Negara Indonesia on November 2, 2024 and sell it today you would earn a total of 3,000 from holding Bank Negara Indonesia or generate 0.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Adaro Energy Tbk vs. Bank Negara Indonesia
Performance |
| Timeline |
| Adaro Energy Tbk |
| Bank Negara Indonesia |
Adaro Energy and Bank Negara Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Adaro Energy and Bank Negara
The main advantage of trading using opposite Adaro Energy and Bank Negara positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Adaro Energy position performs unexpectedly, Bank Negara 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 Negara will offset losses from the drop in Bank Negara's long position.| Adaro Energy vs. Bukit Asam Tbk | Adaro Energy vs. Aneka Tambang Persero | Adaro Energy vs. Perusahaan Gas Negara | Adaro Energy vs. Indo Tambangraya Megah |
| Bank Negara vs. Bank Mandiri Persero | Bank Negara vs. Bank Rakyat Indonesia | Bank Negara vs. Bank Central Asia | Bank Negara vs. Astra International Tbk |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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