Correlation Between Bank Central and Bank Mega
Can any of the company-specific risk be diversified away by investing in both Bank Central and Bank Mega 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 Bank Mega 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 Bank Mega Tbk, you can compare the effects of market volatilities on Bank Central and Bank Mega 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 Bank Mega. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank Central and Bank Mega.
Diversification Opportunities for Bank Central and Bank Mega
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Bank and Bank is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Bank Central Asia and Bank Mega Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bank Mega 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 Bank Mega. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bank Mega Tbk has no effect on the direction of Bank Central i.e., Bank Central and Bank Mega go up and down completely randomly.
Pair Corralation between Bank Central and Bank Mega
Assuming the 90 days trading horizon Bank Central Asia is expected to under-perform the Bank Mega. But the stock apears to be less risky and, when comparing its historical volatility, Bank Central Asia is 1.68 times less risky than Bank Mega. The stock trades about -0.26 of its potential returns per unit of risk. The Bank Mega Tbk is currently generating about -0.14 of returns per unit of risk over similar time horizon. If you would invest 415,000 in Bank Mega Tbk on November 2, 2024 and sell it today you would lose (30,000) from holding Bank Mega Tbk or give up 7.23% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 94.74% |
| Values | Daily Returns |
Bank Central Asia vs. Bank Mega Tbk
Performance |
| Timeline |
| Bank Central Asia |
| Bank Mega Tbk |
Bank Central and Bank Mega Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank Central and Bank Mega
The main advantage of trading using opposite Bank Central and Bank Mega positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank Central position performs unexpectedly, Bank Mega 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 Mega will offset losses from the drop in Bank Mega'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 |
| Bank Mega vs. Bank Mnc Internasional | Bank Mega vs. Bank Qnb Indonesia | Bank Mega vs. Bank Victoria International | Bank Mega vs. Bank Rakyat Indonesia |
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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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