Correlation Between Bank Negara and Multi Spunindo
Can any of the company-specific risk be diversified away by investing in both Bank Negara and Multi Spunindo 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 Multi Spunindo 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 Multi Spunindo Jaya, you can compare the effects of market volatilities on Bank Negara and Multi Spunindo 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 Multi Spunindo. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank Negara and Multi Spunindo.
Diversification Opportunities for Bank Negara and Multi Spunindo
-0.43 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Bank and Multi is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Bank Negara Indonesia and Multi Spunindo Jaya in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Multi Spunindo Jaya 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 Multi Spunindo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Multi Spunindo Jaya has no effect on the direction of Bank Negara i.e., Bank Negara and Multi Spunindo go up and down completely randomly.
Pair Corralation between Bank Negara and Multi Spunindo
Assuming the 90 days trading horizon Bank Negara Indonesia is expected to generate 1.43 times more return on investment than Multi Spunindo. However, Bank Negara is 1.43 times more volatile than Multi Spunindo Jaya. It trades about 0.03 of its potential returns per unit of risk. Multi Spunindo Jaya is currently generating about 0.02 per unit of risk. If you would invest 435,736 in Bank Negara Indonesia on September 2, 2024 and sell it today you would earn a total of 62,264 from holding Bank Negara Indonesia or generate 14.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 44.84% |
| Values | Daily Returns |
Bank Negara Indonesia vs. Multi Spunindo Jaya
Performance |
| Timeline |
| Bank Negara Indonesia |
| Multi Spunindo Jaya |
Bank Negara and Multi Spunindo Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank Negara and Multi Spunindo
The main advantage of trading using opposite Bank Negara and Multi Spunindo positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank Negara position performs unexpectedly, Multi Spunindo 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 Multi Spunindo will offset losses from the drop in Multi Spunindo's long position.| Bank Negara vs. Ace Hardware Indonesia | Bank Negara vs. Merdeka Copper Gold | Bank Negara vs. Mitra Pinasthika Mustika | Bank Negara vs. Jakarta Int Hotels |
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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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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