Correlation Between Bank Danamon and XL Axiata
Can any of the company-specific risk be diversified away by investing in both Bank Danamon and XL Axiata 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 XL Axiata 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 XL Axiata Tbk, you can compare the effects of market volatilities on Bank Danamon and XL Axiata 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 XL Axiata. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank Danamon and XL Axiata.
Diversification Opportunities for Bank Danamon and XL Axiata
0.49 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Bank and EXCL is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Bank Danamon Indonesia and XL Axiata Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on XL Axiata Tbk 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 XL Axiata. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of XL Axiata Tbk has no effect on the direction of Bank Danamon i.e., Bank Danamon and XL Axiata go up and down completely randomly.
Pair Corralation between Bank Danamon and XL Axiata
Assuming the 90 days trading horizon Bank Danamon Indonesia is expected to under-perform the XL Axiata. But the stock apears to be less risky and, when comparing its historical volatility, Bank Danamon Indonesia is 1.05 times less risky than XL Axiata. The stock trades about -0.15 of its potential returns per unit of risk. The XL Axiata Tbk is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 225,000 in XL Axiata Tbk on November 2, 2024 and sell it today you would earn a total of 2,000 from holding XL Axiata Tbk or generate 0.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bank Danamon Indonesia vs. XL Axiata Tbk
Performance |
| Timeline |
| Bank Danamon Indonesia |
| XL Axiata Tbk |
Bank Danamon and XL Axiata Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank Danamon and XL Axiata
The main advantage of trading using opposite Bank Danamon and XL Axiata positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank Danamon position performs unexpectedly, XL Axiata 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 XL Axiata will offset losses from the drop in XL Axiata'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 |
| XL Axiata vs. Indosat Tbk | XL Axiata vs. Jasa Marga Tbk | XL Axiata vs. Indocement Tunggal Prakarsa | XL Axiata vs. Semen Indonesia 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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