Correlation Between Bank Rakyat and Ciptadana Asset
Can any of the company-specific risk be diversified away by investing in both Bank Rakyat and Ciptadana Asset 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 Rakyat and Ciptadana Asset into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bank Rakyat Indonesia and Ciptadana Asset Management, you can compare the effects of market volatilities on Bank Rakyat and Ciptadana Asset 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 Rakyat with a short position of Ciptadana Asset. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank Rakyat and Ciptadana Asset.
Diversification Opportunities for Bank Rakyat and Ciptadana Asset
-0.25 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Bank and Ciptadana is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Bank Rakyat Indonesia and Ciptadana Asset Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ciptadana Asset Mana and Bank Rakyat 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 Rakyat Indonesia are associated (or correlated) with Ciptadana Asset. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ciptadana Asset Mana has no effect on the direction of Bank Rakyat i.e., Bank Rakyat and Ciptadana Asset go up and down completely randomly.
Pair Corralation between Bank Rakyat and Ciptadana Asset
Assuming the 90 days trading horizon Bank Rakyat Indonesia is expected to generate 0.81 times more return on investment than Ciptadana Asset. However, Bank Rakyat Indonesia is 1.24 times less risky than Ciptadana Asset. It trades about 0.12 of its potential returns per unit of risk. Ciptadana Asset Management is currently generating about 0.07 per unit of risk. If you would invest 406,171 in Bank Rakyat Indonesia on October 25, 2024 and sell it today you would earn a total of 19,829 from holding Bank Rakyat Indonesia or generate 4.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bank Rakyat Indonesia vs. Ciptadana Asset Management
Performance |
| Timeline |
| Bank Rakyat Indonesia |
| Ciptadana Asset Mana |
Bank Rakyat and Ciptadana Asset Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank Rakyat and Ciptadana Asset
The main advantage of trading using opposite Bank Rakyat and Ciptadana Asset positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank Rakyat position performs unexpectedly, Ciptadana Asset 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 Ciptadana Asset will offset losses from the drop in Ciptadana Asset's long position.| Bank Rakyat vs. Bank Central Asia | Bank Rakyat vs. Bank Mandiri Persero | Bank Rakyat vs. Bank Negara Indonesia | Bank Rakyat vs. Telkom Indonesia Tbk |
| Ciptadana Asset vs. Bank Central Asia | Ciptadana Asset vs. Bank Rakyat Indonesia | Ciptadana Asset vs. Bayan Resources Tbk | Ciptadana Asset 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.
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