Correlation Between Bank Negara and Alkindo Naratama
Can any of the company-specific risk be diversified away by investing in both Bank Negara and Alkindo Naratama 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 Negara and Alkindo Naratama into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bank Negara Indonesia and Alkindo Naratama Tbk, you can compare the effects of market volatilities on Bank Negara and Alkindo Naratama 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 Negara with a short position of Alkindo Naratama. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank Negara and Alkindo Naratama.
Diversification Opportunities for Bank Negara and Alkindo Naratama
-0.74 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Bank and Alkindo is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding Bank Negara Indonesia and Alkindo Naratama Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alkindo Naratama Tbk and Bank Negara 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 Negara Indonesia are associated (or correlated) with Alkindo Naratama. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alkindo Naratama Tbk has no effect on the direction of Bank Negara i.e., Bank Negara and Alkindo Naratama go up and down completely randomly.
Pair Corralation between Bank Negara and Alkindo Naratama
Assuming the 90 days trading horizon Bank Negara Indonesia is expected to under-perform the Alkindo Naratama. But the stock apears to be less risky and, when comparing its historical volatility, Bank Negara Indonesia is 1.89 times less risky than Alkindo Naratama. The stock trades about -0.07 of its potential returns per unit of risk. The Alkindo Naratama Tbk is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest 40,800 in Alkindo Naratama Tbk on August 28, 2024 and sell it today you would earn a total of 17,700 from holding Alkindo Naratama Tbk or generate 43.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bank Negara Indonesia vs. Alkindo Naratama Tbk
Performance |
| Timeline |
| Bank Negara Indonesia |
| Alkindo Naratama Tbk |
Bank Negara and Alkindo Naratama Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank Negara and Alkindo Naratama
The main advantage of trading using opposite Bank Negara and Alkindo Naratama positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank Negara position performs unexpectedly, Alkindo Naratama 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 Alkindo Naratama will offset losses from the drop in Alkindo Naratama's long position.| Bank Negara vs. Bank Mandiri Persero | Bank Negara vs. Bank Rakyat Indonesia | Bank Negara vs. Bank Central Asia | Bank Negara vs. Astra International Tbk |
| Alkindo Naratama vs. Kedaung Indah Can | Alkindo Naratama vs. Langgeng Makmur Industri | Alkindo Naratama vs. Kabelindo Murni Tbk | Alkindo Naratama vs. Mustika Ratu 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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