Correlation Between Bank Central and Mitra Adiperkasa
Can any of the company-specific risk be diversified away by investing in both Bank Central and Mitra Adiperkasa 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 Mitra Adiperkasa 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 Mitra Adiperkasa Tbk, you can compare the effects of market volatilities on Bank Central and Mitra Adiperkasa 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 Mitra Adiperkasa. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank Central and Mitra Adiperkasa.
Diversification Opportunities for Bank Central and Mitra Adiperkasa
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Bank and Mitra is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Bank Central Asia and Mitra Adiperkasa Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mitra Adiperkasa Tbk 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 Mitra Adiperkasa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mitra Adiperkasa Tbk has no effect on the direction of Bank Central i.e., Bank Central and Mitra Adiperkasa go up and down completely randomly.
Pair Corralation between Bank Central and Mitra Adiperkasa
Assuming the 90 days trading horizon Bank Central Asia is expected to generate 0.4 times more return on investment than Mitra Adiperkasa. However, Bank Central Asia is 2.53 times less risky than Mitra Adiperkasa. It trades about -0.17 of its potential returns per unit of risk. Mitra Adiperkasa Tbk is currently generating about -0.13 per unit of risk. If you would invest 1,054,739 in Bank Central Asia on August 29, 2024 and sell it today you would lose (54,739) from holding Bank Central Asia or give up 5.19% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bank Central Asia vs. Mitra Adiperkasa Tbk
Performance |
| Timeline |
| Bank Central Asia |
| Mitra Adiperkasa Tbk |
Bank Central and Mitra Adiperkasa Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank Central and Mitra Adiperkasa
The main advantage of trading using opposite Bank Central and Mitra Adiperkasa positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank Central position performs unexpectedly, Mitra Adiperkasa 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 Mitra Adiperkasa will offset losses from the drop in Mitra Adiperkasa'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 |
| Mitra Adiperkasa vs. Ramayana Lestari Sentosa | Mitra Adiperkasa vs. Ace Hardware Indonesia | Mitra Adiperkasa vs. Summarecon Agung Tbk | Mitra Adiperkasa vs. Media Nusantara Citra |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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