Correlation Between Bank Central and Panca Budi
Can any of the company-specific risk be diversified away by investing in both Bank Central and Panca Budi 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 Panca Budi 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 Panca Budi Idaman, you can compare the effects of market volatilities on Bank Central and Panca Budi 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 Panca Budi. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank Central and Panca Budi.
Diversification Opportunities for Bank Central and Panca Budi
-0.49 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Bank and Panca is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Bank Central Asia and Panca Budi Idaman in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Panca Budi Idaman 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 Panca Budi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Panca Budi Idaman has no effect on the direction of Bank Central i.e., Bank Central and Panca Budi go up and down completely randomly.
Pair Corralation between Bank Central and Panca Budi
Assuming the 90 days trading horizon Bank Central is expected to generate 3.45 times less return on investment than Panca Budi. But when comparing it to its historical volatility, Bank Central Asia is 1.22 times less risky than Panca Budi. It trades about 0.03 of its potential returns per unit of risk. Panca Budi Idaman is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 34,604 in Panca Budi Idaman on August 25, 2024 and sell it today you would earn a total of 18,396 from holding Panca Budi Idaman or generate 53.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bank Central Asia vs. Panca Budi Idaman
Performance |
| Timeline |
| Bank Central Asia |
| Panca Budi Idaman |
Bank Central and Panca Budi Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank Central and Panca Budi
The main advantage of trading using opposite Bank Central and Panca Budi positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank Central position performs unexpectedly, Panca Budi 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 Panca Budi will offset losses from the drop in Panca Budi'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 |
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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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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