Correlation Between Bank Central and PT Charlie
Can any of the company-specific risk be diversified away by investing in both Bank Central and PT Charlie 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 PT Charlie 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 PT Charlie Hospital, you can compare the effects of market volatilities on Bank Central and PT Charlie 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 PT Charlie. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank Central and PT Charlie.
Diversification Opportunities for Bank Central and PT Charlie
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Bank and RSCH is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Bank Central Asia and PT Charlie Hospital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PT Charlie Hospital 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 PT Charlie. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PT Charlie Hospital has no effect on the direction of Bank Central i.e., Bank Central and PT Charlie go up and down completely randomly.
Pair Corralation between Bank Central and PT Charlie
Assuming the 90 days trading horizon Bank Central is expected to generate 7.54 times less return on investment than PT Charlie. But when comparing it to its historical volatility, Bank Central Asia is 3.52 times less risky than PT Charlie. It trades about 0.04 of its potential returns per unit of risk. PT Charlie Hospital is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 13,100 in PT Charlie Hospital on August 29, 2024 and sell it today you would earn a total of 20,300 from holding PT Charlie Hospital or generate 154.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 64.14% |
| Values | Daily Returns |
Bank Central Asia vs. PT Charlie Hospital
Performance |
| Timeline |
| Bank Central Asia |
| PT Charlie Hospital |
Bank Central and PT Charlie Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank Central and PT Charlie
The main advantage of trading using opposite Bank Central and PT Charlie positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank Central position performs unexpectedly, PT Charlie 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 PT Charlie will offset losses from the drop in PT Charlie'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 |
| PT Charlie vs. Bank Central Asia | PT Charlie vs. Bank Rakyat Indonesia | PT Charlie vs. Bayan Resources Tbk | PT Charlie vs. Bank Mandiri Persero |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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