Correlation Between Bank Permata and TBS Energi
Can any of the company-specific risk be diversified away by investing in both Bank Permata and TBS Energi 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 TBS Energi 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 TBS Energi Utama, you can compare the effects of market volatilities on Bank Permata and TBS Energi 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 TBS Energi. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank Permata and TBS Energi.
Diversification Opportunities for Bank Permata and TBS Energi
-0.46 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Bank and TBS is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Bank Permata Tbk and TBS Energi Utama in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TBS Energi Utama 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 TBS Energi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TBS Energi Utama has no effect on the direction of Bank Permata i.e., Bank Permata and TBS Energi go up and down completely randomly.
Pair Corralation between Bank Permata and TBS Energi
Assuming the 90 days trading horizon Bank Permata is expected to generate 2.1 times less return on investment than TBS Energi. But when comparing it to its historical volatility, Bank Permata Tbk is 1.45 times less risky than TBS Energi. It trades about 0.02 of its potential returns per unit of risk. TBS Energi Utama is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 39,800 in TBS Energi Utama on August 30, 2024 and sell it today you would earn a total of 6,400 from holding TBS Energi Utama or generate 16.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.74% |
| Values | Daily Returns |
Bank Permata Tbk vs. TBS Energi Utama
Performance |
| Timeline |
| Bank Permata Tbk |
| TBS Energi Utama |
Bank Permata and TBS Energi Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank Permata and TBS Energi
The main advantage of trading using opposite Bank Permata and TBS Energi positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank Permata position performs unexpectedly, TBS Energi 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 TBS Energi will offset losses from the drop in TBS Energi's long position.| Bank Permata vs. Bank Cimb Niaga | Bank Permata vs. Indosat Tbk | Bank Permata vs. Astra Agro Lestari | Bank Permata vs. Bank Mandiri Persero |
| TBS Energi vs. Golden Eagle Energy | TBS Energi vs. Baramulti Suksessarana Tbk | TBS Energi vs. Samindo Resources Tbk | TBS Energi vs. Resource Alam 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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