Correlation Between Bank Cimb and Indosat Tbk
Can any of the company-specific risk be diversified away by investing in both Bank Cimb and Indosat Tbk 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 Cimb and Indosat Tbk into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bank Cimb Niaga and Indosat Tbk, you can compare the effects of market volatilities on Bank Cimb and Indosat Tbk 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 Cimb with a short position of Indosat Tbk. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank Cimb and Indosat Tbk.
Diversification Opportunities for Bank Cimb and Indosat Tbk
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Bank and Indosat is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Bank Cimb Niaga and Indosat Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Indosat Tbk and Bank Cimb 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 Cimb Niaga are associated (or correlated) with Indosat Tbk. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Indosat Tbk has no effect on the direction of Bank Cimb i.e., Bank Cimb and Indosat Tbk go up and down completely randomly.
Pair Corralation between Bank Cimb and Indosat Tbk
Assuming the 90 days trading horizon Bank Cimb Niaga is expected to generate 0.37 times more return on investment than Indosat Tbk. However, Bank Cimb Niaga is 2.7 times less risky than Indosat Tbk. It trades about 0.1 of its potential returns per unit of risk. Indosat Tbk is currently generating about 0.0 per unit of risk. If you would invest 91,191 in Bank Cimb Niaga on August 30, 2024 and sell it today you would earn a total of 85,809 from holding Bank Cimb Niaga or generate 94.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bank Cimb Niaga vs. Indosat Tbk
Performance |
| Timeline |
| Bank Cimb Niaga |
| Indosat Tbk |
Bank Cimb and Indosat Tbk Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank Cimb and Indosat Tbk
The main advantage of trading using opposite Bank Cimb and Indosat Tbk positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank Cimb position performs unexpectedly, Indosat Tbk 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 Indosat Tbk will offset losses from the drop in Indosat Tbk's long position.| Bank Cimb vs. Bank Danamon Indonesia | Bank Cimb vs. Bank Maybank Indonesia | Bank Cimb vs. Bank Pan Indonesia | Bank Cimb vs. Indosat Tbk |
| Indosat Tbk vs. Astra Agro Lestari | Indosat Tbk vs. Vale Indonesia Tbk | Indosat Tbk vs. Timah Persero Tbk | Indosat Tbk vs. Medco Energi Internasional |
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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