Correlation Between Bank Permata and Bank Cimb
Can any of the company-specific risk be diversified away by investing in both Bank Permata and Bank Cimb 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 Permata and Bank Cimb into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bank Permata Tbk and Bank Cimb Niaga, you can compare the effects of market volatilities on Bank Permata and Bank Cimb 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 Permata with a short position of Bank Cimb. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank Permata and Bank Cimb.
Diversification Opportunities for Bank Permata and Bank Cimb
0.34 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Bank and Bank is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Bank Permata Tbk and Bank Cimb Niaga in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bank Cimb Niaga and Bank Permata 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 Permata Tbk are associated (or correlated) with Bank Cimb. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bank Cimb Niaga has no effect on the direction of Bank Permata i.e., Bank Permata and Bank Cimb go up and down completely randomly.
Pair Corralation between Bank Permata and Bank Cimb
Assuming the 90 days trading horizon Bank Permata Tbk is expected to under-perform the Bank Cimb. In addition to that, Bank Permata is 2.35 times more volatile than Bank Cimb Niaga. It trades about -0.34 of its total potential returns per unit of risk. Bank Cimb Niaga is currently generating about -0.22 per unit of volatility. If you would invest 188,000 in Bank Cimb Niaga on August 28, 2024 and sell it today you would lose (9,000) from holding Bank Cimb Niaga or give up 4.79% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bank Permata Tbk vs. Bank Cimb Niaga
Performance |
| Timeline |
| Bank Permata Tbk |
| Bank Cimb Niaga |
Bank Permata and Bank Cimb Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank Permata and Bank Cimb
The main advantage of trading using opposite Bank Permata and Bank Cimb positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank Permata position performs unexpectedly, Bank Cimb 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 Bank Cimb will offset losses from the drop in Bank Cimb's long position.| Bank Permata vs. Bank Cimb Niaga | Bank Permata vs. Bank Maybank Indonesia | Bank Permata vs. Bank Danamon Indonesia | Bank Permata vs. Bank Pan Indonesia |
| Bank Cimb vs. Bank Danamon Indonesia | Bank Cimb vs. Bank Maybank Indonesia | Bank Cimb vs. Bank Pan Indonesia | Bank Cimb vs. Indosat 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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