Correlation Between Bank of America and Tembaga Mulia
Can any of the company-specific risk be diversified away by investing in both Bank of America and Tembaga Mulia 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 Tembaga Mulia 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 Tembaga Mulia Semanan, you can compare the effects of market volatilities on Bank of America and Tembaga Mulia 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 Tembaga Mulia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and Tembaga Mulia.
Diversification Opportunities for Bank of America and Tembaga Mulia
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Bank and Tembaga is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and Tembaga Mulia Semanan in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tembaga Mulia Semanan 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 Tembaga Mulia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tembaga Mulia Semanan has no effect on the direction of Bank of America i.e., Bank of America and Tembaga Mulia go up and down completely randomly.
Pair Corralation between Bank of America and Tembaga Mulia
Considering the 90-day investment horizon Bank of America is expected to generate 1.25 times more return on investment than Tembaga Mulia. However, Bank of America is 1.25 times more volatile than Tembaga Mulia Semanan. It trades about 0.31 of its potential returns per unit of risk. Tembaga Mulia Semanan is currently generating about -0.08 per unit of risk. If you would invest 4,182 in Bank of America on September 1, 2024 and sell it today you would earn a total of 569.00 from holding Bank of America or generate 13.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Bank of America vs. Tembaga Mulia Semanan
Performance |
| Timeline |
| Bank of America |
| Tembaga Mulia Semanan |
Bank of America and Tembaga Mulia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and Tembaga Mulia
The main advantage of trading using opposite Bank of America and Tembaga Mulia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, Tembaga Mulia 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 Tembaga Mulia will offset losses from the drop in Tembaga Mulia'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 |
| Tembaga Mulia vs. Matahari Department Store | Tembaga Mulia vs. Multi Medika Internasional | Tembaga Mulia vs. Visi Media Asia | Tembaga Mulia vs. Bayan Resources 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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