Correlation Between Bank Negara and Transkon Jaya
Can any of the company-specific risk be diversified away by investing in both Bank Negara and Transkon Jaya 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 Transkon Jaya 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 Transkon Jaya Pt, you can compare the effects of market volatilities on Bank Negara and Transkon Jaya 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 Transkon Jaya. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank Negara and Transkon Jaya.
Diversification Opportunities for Bank Negara and Transkon Jaya
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Bank and Transkon is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Bank Negara Indonesia and Transkon Jaya Pt in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Transkon Jaya Pt 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 Transkon Jaya. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Transkon Jaya Pt has no effect on the direction of Bank Negara i.e., Bank Negara and Transkon Jaya go up and down completely randomly.
Pair Corralation between Bank Negara and Transkon Jaya
Assuming the 90 days trading horizon Bank Negara is expected to generate 4.09 times less return on investment than Transkon Jaya. In addition to that, Bank Negara is 1.08 times more volatile than Transkon Jaya Pt. It trades about 0.02 of its total potential returns per unit of risk. Transkon Jaya Pt is currently generating about 0.09 per unit of volatility. If you would invest 17,100 in Transkon Jaya Pt on September 3, 2024 and sell it today you would earn a total of 3,100 from holding Transkon Jaya Pt or generate 18.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bank Negara Indonesia vs. Transkon Jaya Pt
Performance |
| Timeline |
| Bank Negara Indonesia |
| Transkon Jaya Pt |
Bank Negara and Transkon Jaya Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank Negara and Transkon Jaya
The main advantage of trading using opposite Bank Negara and Transkon Jaya positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank Negara position performs unexpectedly, Transkon Jaya 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 Transkon Jaya will offset losses from the drop in Transkon Jaya'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 |
| Transkon Jaya vs. Pelayaran Nelly Dwi | Transkon Jaya vs. Guna Timur Raya | Transkon Jaya vs. Batavia Prosperindo Trans | Transkon Jaya vs. PT Trimuda Nuansa |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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