Correlation Between Bank Negara and Darma Henwa
Can any of the company-specific risk be diversified away by investing in both Bank Negara and Darma Henwa 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 Darma Henwa 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 Darma Henwa Tbk, you can compare the effects of market volatilities on Bank Negara and Darma Henwa 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 Darma Henwa. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank Negara and Darma Henwa.
Diversification Opportunities for Bank Negara and Darma Henwa
-0.65 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Bank and Darma is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Bank Negara Indonesia and Darma Henwa Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Darma Henwa 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 Darma Henwa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Darma Henwa Tbk has no effect on the direction of Bank Negara i.e., Bank Negara and Darma Henwa go up and down completely randomly.
Pair Corralation between Bank Negara and Darma Henwa
Assuming the 90 days trading horizon Bank Negara Indonesia is expected to under-perform the Darma Henwa. But the stock apears to be less risky and, when comparing its historical volatility, Bank Negara Indonesia is 2.0 times less risky than Darma Henwa. The stock trades about -0.02 of its potential returns per unit of risk. The Darma Henwa Tbk is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 5,900 in Darma Henwa Tbk on August 28, 2024 and sell it today you would earn a total of 5,800 from holding Darma Henwa Tbk or generate 98.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 99.49% |
| Values | Daily Returns |
Bank Negara Indonesia vs. Darma Henwa Tbk
Performance |
| Timeline |
| Bank Negara Indonesia |
| Darma Henwa Tbk |
Bank Negara and Darma Henwa Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank Negara and Darma Henwa
The main advantage of trading using opposite Bank Negara and Darma Henwa positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank Negara position performs unexpectedly, Darma Henwa 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 Darma Henwa will offset losses from the drop in Darma Henwa'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 |
| Darma Henwa vs. Bakrieland Development Tbk | Darma Henwa vs. Energi Mega Persada | Darma Henwa vs. Bakrie Brothers Tbk | Darma Henwa vs. Bakrie Sumatera Plantations |
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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