Correlation Between Bank Negara and Nanotech Indonesia
Can any of the company-specific risk be diversified away by investing in both Bank Negara and Nanotech Indonesia 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 Nanotech Indonesia 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 Nanotech Indonesia Global, you can compare the effects of market volatilities on Bank Negara and Nanotech Indonesia 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 Nanotech Indonesia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank Negara and Nanotech Indonesia.
Diversification Opportunities for Bank Negara and Nanotech Indonesia
-0.45 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Bank and Nanotech is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Bank Negara Indonesia and Nanotech Indonesia Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nanotech Indonesia Global 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 Nanotech Indonesia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nanotech Indonesia Global has no effect on the direction of Bank Negara i.e., Bank Negara and Nanotech Indonesia go up and down completely randomly.
Pair Corralation between Bank Negara and Nanotech Indonesia
Assuming the 90 days trading horizon Bank Negara Indonesia is expected to under-perform the Nanotech Indonesia. But the stock apears to be less risky and, when comparing its historical volatility, Bank Negara Indonesia is 2.31 times less risky than Nanotech Indonesia. The stock trades about -0.01 of its potential returns per unit of risk. The Nanotech Indonesia Global is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 1,400 in Nanotech Indonesia Global on November 28, 2024 and sell it today you would earn a total of 1,600 from holding Nanotech Indonesia Global or generate 114.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bank Negara Indonesia vs. Nanotech Indonesia Global
Performance |
| Timeline |
| Bank Negara Indonesia |
| Nanotech Indonesia Global |
Bank Negara and Nanotech Indonesia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank Negara and Nanotech Indonesia
The main advantage of trading using opposite Bank Negara and Nanotech Indonesia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank Negara position performs unexpectedly, Nanotech Indonesia 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 Nanotech Indonesia will offset losses from the drop in Nanotech Indonesia'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 |
| Nanotech Indonesia vs. Sumber Tani Agung | Nanotech Indonesia vs. Dayamitra Telekomunikasi PT | Nanotech Indonesia vs. Wahana Inti MakmurTbk | Nanotech Indonesia vs. Wir Asia 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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