Correlation Between Bank Central and Optima Prima
Can any of the company-specific risk be diversified away by investing in both Bank Central and Optima Prima 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 Optima Prima 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 Optima Prima Metal, you can compare the effects of market volatilities on Bank Central and Optima Prima 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 Optima Prima. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank Central and Optima Prima.
Diversification Opportunities for Bank Central and Optima Prima
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Bank and Optima is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Bank Central Asia and Optima Prima Metal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Optima Prima Metal 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 Optima Prima. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Optima Prima Metal has no effect on the direction of Bank Central i.e., Bank Central and Optima Prima go up and down completely randomly.
Pair Corralation between Bank Central and Optima Prima
Assuming the 90 days trading horizon Bank Central Asia is expected to generate 0.33 times more return on investment than Optima Prima. However, Bank Central Asia is 3.04 times less risky than Optima Prima. It trades about 0.03 of its potential returns per unit of risk. Optima Prima Metal is currently generating about 0.01 per unit of risk. If you would invest 883,305 in Bank Central Asia on August 31, 2024 and sell it today you would earn a total of 116,695 from holding Bank Central Asia or generate 13.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.72% |
| Values | Daily Returns |
Bank Central Asia vs. Optima Prima Metal
Performance |
| Timeline |
| Bank Central Asia |
| Optima Prima Metal |
Bank Central and Optima Prima Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank Central and Optima Prima
The main advantage of trading using opposite Bank Central and Optima Prima positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank Central position performs unexpectedly, Optima Prima 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 Optima Prima will offset losses from the drop in Optima Prima'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 |
| Optima Prima vs. Emdeki Utama Tbk | Optima Prima vs. Nusantara Almazia | Optima Prima vs. Sentral Mitra Informatika | Optima Prima vs. Darmi Bersaudara 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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