Correlation Between Bank of America and Berkah Prima
Can any of the company-specific risk be diversified away by investing in both Bank of America and Berkah Prima 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 Bank of America and Berkah Prima into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bank of America and Berkah Prima Perkasa, you can compare the effects of market volatilities on Bank of America and Berkah Prima 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 Bank of America with a short position of Berkah Prima. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and Berkah Prima.
Diversification Opportunities for Bank of America and Berkah Prima
-0.12 | Correlation Coefficient |
Good diversification
The 3 months correlation between Bank and Berkah is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and Berkah Prima Perkasa in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Berkah Prima Perkasa and Bank of America 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 Bank of America are associated (or correlated) with Berkah Prima. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Berkah Prima Perkasa has no effect on the direction of Bank of America i.e., Bank of America and Berkah Prima go up and down completely randomly.
Pair Corralation between Bank of America and Berkah Prima
Considering the 90-day investment horizon Bank of America is expected to generate 1.62 times more return on investment than Berkah Prima. However, Bank of America is 1.62 times more volatile than Berkah Prima Perkasa. It trades about 0.32 of its potential returns per unit of risk. Berkah Prima Perkasa is currently generating about -0.19 per unit of risk. If you would invest 4,176 in Bank of America on September 2, 2024 and sell it today you would earn a total of 575.00 from holding Bank of America or generate 13.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bank of America vs. Berkah Prima Perkasa
Performance |
| Timeline |
| Bank of America |
| Berkah Prima Perkasa |
Bank of America and Berkah Prima Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and Berkah Prima
The main advantage of trading using opposite Bank of America and Berkah Prima positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, Berkah Prima 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 Berkah Prima will offset losses from the drop in Berkah Prima's long position.| Bank of America vs. Citigroup | Bank of America vs. Nu Holdings | Bank of America vs. HSBC Holdings PLC | Bank of America vs. Bank of Montreal |
| Berkah Prima vs. Multipolar Technology Tbk | Berkah Prima vs. Hensel Davest Indonesia | Berkah Prima vs. Anabatic Technologies Tbk | Berkah Prima vs. Digital Mediatama Maxima |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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