Correlation Between Bank Negara and Hoffmen Cleanindo
Can any of the company-specific risk be diversified away by investing in both Bank Negara and Hoffmen Cleanindo 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 Hoffmen Cleanindo 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 Hoffmen Cleanindo, you can compare the effects of market volatilities on Bank Negara and Hoffmen Cleanindo 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 Hoffmen Cleanindo. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank Negara and Hoffmen Cleanindo.
Diversification Opportunities for Bank Negara and Hoffmen Cleanindo
0.52 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Bank and Hoffmen is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Bank Negara Indonesia and Hoffmen Cleanindo in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hoffmen Cleanindo 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 Hoffmen Cleanindo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hoffmen Cleanindo has no effect on the direction of Bank Negara i.e., Bank Negara and Hoffmen Cleanindo go up and down completely randomly.
Pair Corralation between Bank Negara and Hoffmen Cleanindo
Assuming the 90 days trading horizon Bank Negara Indonesia is expected to generate 0.76 times more return on investment than Hoffmen Cleanindo. However, Bank Negara Indonesia is 1.31 times less risky than Hoffmen Cleanindo. It trades about -0.16 of its potential returns per unit of risk. Hoffmen Cleanindo is currently generating about -0.21 per unit of risk. If you would invest 530,000 in Bank Negara Indonesia on September 3, 2024 and sell it today you would lose (32,000) from holding Bank Negara Indonesia or give up 6.04% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bank Negara Indonesia vs. Hoffmen Cleanindo
Performance |
| Timeline |
| Bank Negara Indonesia |
| Hoffmen Cleanindo |
Bank Negara and Hoffmen Cleanindo Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank Negara and Hoffmen Cleanindo
The main advantage of trading using opposite Bank Negara and Hoffmen Cleanindo positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank Negara position performs unexpectedly, Hoffmen Cleanindo 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 Hoffmen Cleanindo will offset losses from the drop in Hoffmen Cleanindo's long position.| Bank Negara vs. Paninvest Tbk | Bank Negara vs. Mitra Pinasthika Mustika | Bank Negara vs. Jakarta Int Hotels | Bank Negara vs. Asuransi Harta Aman |
| Hoffmen Cleanindo vs. Chandra Asri Petrochemical | Hoffmen Cleanindo vs. Bank Negara Indonesia | Hoffmen Cleanindo vs. Sumber Alfaria Trijaya | Hoffmen Cleanindo vs. Mitra Pinasthika Mustika |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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