Correlation Between Bank Central and Soechi Lines
Can any of the company-specific risk be diversified away by investing in both Bank Central and Soechi Lines 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 Soechi Lines 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 Soechi Lines Tbk, you can compare the effects of market volatilities on Bank Central and Soechi Lines 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 Soechi Lines. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank Central and Soechi Lines.
Diversification Opportunities for Bank Central and Soechi Lines
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Bank and Soechi is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Bank Central Asia and Soechi Lines Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Soechi Lines 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 Soechi Lines. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Soechi Lines Tbk has no effect on the direction of Bank Central i.e., Bank Central and Soechi Lines go up and down completely randomly.
Pair Corralation between Bank Central and Soechi Lines
Assuming the 90 days trading horizon Bank Central Asia is expected to generate 0.65 times more return on investment than Soechi Lines. However, Bank Central Asia is 1.53 times less risky than Soechi Lines. It trades about 0.05 of its potential returns per unit of risk. Soechi Lines Tbk is currently generating about 0.0 per unit of risk. If you would invest 813,798 in Bank Central Asia on September 12, 2024 and sell it today you would earn a total of 218,702 from holding Bank Central Asia or generate 26.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bank Central Asia vs. Soechi Lines Tbk
Performance |
| Timeline |
| Bank Central Asia |
| Soechi Lines Tbk |
Bank Central and Soechi Lines Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank Central and Soechi Lines
The main advantage of trading using opposite Bank Central and Soechi Lines positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank Central position performs unexpectedly, Soechi Lines 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 Soechi Lines will offset losses from the drop in Soechi Lines' 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 |
| Soechi Lines vs. Harum Energy Tbk | Soechi Lines vs. Delta Dunia Makmur | Soechi Lines vs. Adi Sarana Armada | Soechi Lines vs. Elang Mahkota Teknologi |
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 Anywhere module to track or share privately all of your investments from the convenience of any device.
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