Correlation Between Bank Negara and Trimitra Propertindo
Can any of the company-specific risk be diversified away by investing in both Bank Negara and Trimitra Propertindo 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 Trimitra Propertindo 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 Trimitra Propertindo Tbk, you can compare the effects of market volatilities on Bank Negara and Trimitra Propertindo 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 Trimitra Propertindo. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank Negara and Trimitra Propertindo.
Diversification Opportunities for Bank Negara and Trimitra Propertindo
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Bank and Trimitra is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Bank Negara Indonesia and Trimitra Propertindo Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Trimitra Propertindo 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 Trimitra Propertindo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Trimitra Propertindo Tbk has no effect on the direction of Bank Negara i.e., Bank Negara and Trimitra Propertindo go up and down completely randomly.
Pair Corralation between Bank Negara and Trimitra Propertindo
Assuming the 90 days trading horizon Bank Negara Indonesia is expected to generate 0.61 times more return on investment than Trimitra Propertindo. However, Bank Negara Indonesia is 1.65 times less risky than Trimitra Propertindo. It trades about -0.12 of its potential returns per unit of risk. Trimitra Propertindo Tbk is currently generating about -0.36 per unit of risk. If you would invest 530,000 in Bank Negara Indonesia on August 30, 2024 and sell it today you would lose (27,500) from holding Bank Negara Indonesia or give up 5.19% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bank Negara Indonesia vs. Trimitra Propertindo Tbk
Performance |
| Timeline |
| Bank Negara Indonesia |
| Trimitra Propertindo Tbk |
Bank Negara and Trimitra Propertindo Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank Negara and Trimitra Propertindo
The main advantage of trading using opposite Bank Negara and Trimitra Propertindo positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank Negara position performs unexpectedly, Trimitra Propertindo 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 Trimitra Propertindo will offset losses from the drop in Trimitra Propertindo'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 |
| Trimitra Propertindo vs. Bakrie Brothers Tbk | Trimitra Propertindo vs. Bakrie Sumatera Plantations | Trimitra Propertindo vs. Energi Mega Persada | Trimitra Propertindo vs. Darma Henwa 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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