Correlation Between PT Bank and Capital Financial
Can any of the company-specific risk be diversified away by investing in both PT Bank and Capital Financial 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 PT Bank and Capital Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PT Bank Bisnis and Capital Financial Indonesia, you can compare the effects of market volatilities on PT Bank and Capital Financial 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 PT Bank with a short position of Capital Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of PT Bank and Capital Financial.
Diversification Opportunities for PT Bank and Capital Financial
-0.77 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between BBSI and Capital is -0.77. Overlapping area represents the amount of risk that can be diversified away by holding PT Bank Bisnis and Capital Financial Indonesia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Capital Financial and PT Bank 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 PT Bank Bisnis are associated (or correlated) with Capital Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Capital Financial has no effect on the direction of PT Bank i.e., PT Bank and Capital Financial go up and down completely randomly.
Pair Corralation between PT Bank and Capital Financial
Assuming the 90 days trading horizon PT Bank Bisnis is expected to under-perform the Capital Financial. But the stock apears to be less risky and, when comparing its historical volatility, PT Bank Bisnis is 2.35 times less risky than Capital Financial. The stock trades about -0.06 of its potential returns per unit of risk. The Capital Financial Indonesia is currently generating about 0.27 of returns per unit of risk over similar time horizon. If you would invest 63,000 in Capital Financial Indonesia on November 27, 2024 and sell it today you would earn a total of 8,500 from holding Capital Financial Indonesia or generate 13.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
PT Bank Bisnis vs. Capital Financial Indonesia
Performance |
| Timeline |
| PT Bank Bisnis |
| Capital Financial |
PT Bank and Capital Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PT Bank and Capital Financial
The main advantage of trading using opposite PT Bank and Capital Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PT Bank position performs unexpectedly, Capital Financial 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 Capital Financial will offset losses from the drop in Capital Financial's long position.| PT Bank vs. Bk Harda Internasional | PT Bank vs. Bank Yudha Bhakti | PT Bank vs. Bank Net Indonesia | PT Bank vs. Bank Amar Indonesia |
| Capital Financial vs. Pacific Strategic Financial | Capital Financial vs. Bk Harda Internasional | Capital Financial vs. Indoritel Makmur Internasional | Capital Financial vs. Bank Sinarmas 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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