Correlation Between Bank Negara and PT UBC
Can any of the company-specific risk be diversified away by investing in both Bank Negara and PT UBC 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 PT UBC 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 PT UBC Medical, you can compare the effects of market volatilities on Bank Negara and PT UBC 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 PT UBC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank Negara and PT UBC.
Diversification Opportunities for Bank Negara and PT UBC
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Bank and LABS is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Bank Negara Indonesia and PT UBC Medical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PT UBC Medical 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 PT UBC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PT UBC Medical has no effect on the direction of Bank Negara i.e., Bank Negara and PT UBC go up and down completely randomly.
Pair Corralation between Bank Negara and PT UBC
Assuming the 90 days trading horizon Bank Negara is expected to generate 1.6 times less return on investment than PT UBC. But when comparing it to its historical volatility, Bank Negara Indonesia is 2.77 times less risky than PT UBC. It trades about 0.04 of its potential returns per unit of risk. PT UBC Medical is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 13,700 in PT UBC Medical on September 12, 2024 and sell it today you would earn a total of 0.00 from holding PT UBC Medical or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 31.95% |
| Values | Daily Returns |
Bank Negara Indonesia vs. PT UBC Medical
Performance |
| Timeline |
| Bank Negara Indonesia |
| PT UBC Medical |
Bank Negara and PT UBC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank Negara and PT UBC
The main advantage of trading using opposite Bank Negara and PT UBC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank Negara position performs unexpectedly, PT UBC 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 UBC will offset losses from the drop in PT UBC'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 |
| PT UBC vs. Bank Central Asia | PT UBC vs. Bank Rakyat Indonesia | PT UBC vs. Bayan Resources Tbk | PT UBC 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
Other Complementary Tools
| Portfolio Dashboard Portfolio dashboard that provides centralized access to all your investments | |
| Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk | |
| Transaction History View history of all your transactions and understand their impact on performance | |
| Price Ceiling Movement Calculate and plot Price Ceiling Movement for different equity instruments | |
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated |