Correlation Between Bank Central and Argha Karya
Can any of the company-specific risk be diversified away by investing in both Bank Central and Argha Karya 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 Central and Argha Karya into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bank Central Asia and Argha Karya Prima, you can compare the effects of market volatilities on Bank Central and Argha Karya 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 Central with a short position of Argha Karya. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank Central and Argha Karya.
Diversification Opportunities for Bank Central and Argha Karya
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Bank and Argha is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Bank Central Asia and Argha Karya Prima in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Argha Karya Prima and Bank Central 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 Central Asia are associated (or correlated) with Argha Karya. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Argha Karya Prima has no effect on the direction of Bank Central i.e., Bank Central and Argha Karya go up and down completely randomly.
Pair Corralation between Bank Central and Argha Karya
Assuming the 90 days trading horizon Bank Central Asia is expected to generate 0.71 times more return on investment than Argha Karya. However, Bank Central Asia is 1.4 times less risky than Argha Karya. It trades about -0.1 of its potential returns per unit of risk. Argha Karya Prima is currently generating about -0.23 per unit of risk. If you would invest 1,029,864 in Bank Central Asia on August 31, 2024 and sell it today you would lose (29,864) from holding Bank Central Asia or give up 2.9% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bank Central Asia vs. Argha Karya Prima
Performance |
| Timeline |
| Bank Central Asia |
| Argha Karya Prima |
Bank Central and Argha Karya Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank Central and Argha Karya
The main advantage of trading using opposite Bank Central and Argha Karya positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank Central position performs unexpectedly, Argha Karya 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 Argha Karya will offset losses from the drop in Argha Karya's long position.| Bank Central vs. Bank Rakyat Indonesia | Bank Central vs. Bank Mandiri Persero | Bank Central vs. Bank Negara Indonesia | Bank Central vs. Astra International Tbk |
| Argha Karya vs. Asiaplast Industries Tbk | Argha Karya vs. Alumindo Light Metal | Argha Karya vs. Berlina Tbk | Argha Karya vs. Anugerah Kagum Karya |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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