Correlation Between Bank Danamon and Adira Dinamika
Can any of the company-specific risk be diversified away by investing in both Bank Danamon and Adira Dinamika 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 Danamon and Adira Dinamika into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bank Danamon Indonesia and Adira Dinamika Multi, you can compare the effects of market volatilities on Bank Danamon and Adira Dinamika 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 Danamon with a short position of Adira Dinamika. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank Danamon and Adira Dinamika.
Diversification Opportunities for Bank Danamon and Adira Dinamika
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Bank and Adira is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Bank Danamon Indonesia and Adira Dinamika Multi in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Adira Dinamika Multi and Bank Danamon 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 Danamon Indonesia are associated (or correlated) with Adira Dinamika. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Adira Dinamika Multi has no effect on the direction of Bank Danamon i.e., Bank Danamon and Adira Dinamika go up and down completely randomly.
Pair Corralation between Bank Danamon and Adira Dinamika
Assuming the 90 days trading horizon Bank Danamon Indonesia is expected to generate 0.62 times more return on investment than Adira Dinamika. However, Bank Danamon Indonesia is 1.61 times less risky than Adira Dinamika. It trades about -0.11 of its potential returns per unit of risk. Adira Dinamika Multi is currently generating about -0.36 per unit of risk. If you would invest 261,000 in Bank Danamon Indonesia on August 28, 2024 and sell it today you would lose (4,000) from holding Bank Danamon Indonesia or give up 1.53% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bank Danamon Indonesia vs. Adira Dinamika Multi
Performance |
| Timeline |
| Bank Danamon Indonesia |
| Adira Dinamika Multi |
Bank Danamon and Adira Dinamika Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank Danamon and Adira Dinamika
The main advantage of trading using opposite Bank Danamon and Adira Dinamika positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank Danamon position performs unexpectedly, Adira Dinamika 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 Adira Dinamika will offset losses from the drop in Adira Dinamika's long position.| Bank Danamon vs. Bank Cimb Niaga | Bank Danamon vs. Indosat Tbk | Bank Danamon vs. Astra Agro Lestari | Bank Danamon vs. Bank Mandiri Persero |
| Adira Dinamika vs. BFI Finance Indonesia | Adira Dinamika vs. Clipan Finance Indonesia | Adira Dinamika vs. Astra Otoparts Tbk | Adira Dinamika vs. Bank Danamon Indonesia |
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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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