Correlation Between Bank Central and Bank Ocbc
Can any of the company-specific risk be diversified away by investing in both Bank Central and Bank Ocbc 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 Ocbc 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 Ocbc Nisp, you can compare the effects of market volatilities on Bank Central and Bank Ocbc 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 Ocbc. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank Central and Bank Ocbc.
Diversification Opportunities for Bank Central and Bank Ocbc
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Bank and Bank is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Bank Central Asia and Bank Ocbc Nisp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bank Ocbc Nisp 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 Ocbc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bank Ocbc Nisp has no effect on the direction of Bank Central i.e., Bank Central and Bank Ocbc go up and down completely randomly.
Pair Corralation between Bank Central and Bank Ocbc
Assuming the 90 days trading horizon Bank Central is expected to generate 3.23 times less return on investment than Bank Ocbc. But when comparing it to its historical volatility, Bank Central Asia is 1.18 times less risky than Bank Ocbc. It trades about 0.04 of its potential returns per unit of risk. Bank Ocbc Nisp is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 68,984 in Bank Ocbc Nisp on October 24, 2024 and sell it today you would earn a total of 64,516 from holding Bank Ocbc Nisp or generate 93.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.79% |
| Values | Daily Returns |
Bank Central Asia vs. Bank Ocbc Nisp
Performance |
| Timeline |
| Bank Central Asia |
| Bank Ocbc Nisp |
Bank Central and Bank Ocbc Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank Central and Bank Ocbc
The main advantage of trading using opposite Bank Central and Bank Ocbc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank Central position performs unexpectedly, Bank Ocbc 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 Ocbc will offset losses from the drop in Bank Ocbc'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 Ocbc vs. Bank Mega Tbk | Bank Ocbc vs. Bank Pan Indonesia | Bank Ocbc vs. Bank Permata Tbk | Bank Ocbc vs. Bank Cimb Niaga |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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