Correlation Between Bank Victoria and Capital Financial
Can any of the company-specific risk be diversified away by investing in both Bank Victoria and Capital Financial 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 Victoria and Capital Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bank Victoria International and Capital Financial Indonesia, you can compare the effects of market volatilities on Bank Victoria and Capital Financial 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 Victoria with a short position of Capital Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank Victoria and Capital Financial.
Diversification Opportunities for Bank Victoria and Capital Financial
0.17 | Correlation Coefficient |
Average diversification
The 3 months correlation between Bank and Capital is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Bank Victoria International and Capital Financial Indonesia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Capital Financial and Bank Victoria 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 Victoria International are associated (or correlated) with Capital Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Capital Financial has no effect on the direction of Bank Victoria i.e., Bank Victoria and Capital Financial go up and down completely randomly.
Pair Corralation between Bank Victoria and Capital Financial
Assuming the 90 days trading horizon Bank Victoria is expected to generate 1.4 times less return on investment than Capital Financial. In addition to that, Bank Victoria is 3.25 times more volatile than Capital Financial Indonesia. It trades about 0.07 of its total potential returns per unit of risk. Capital Financial Indonesia is currently generating about 0.3 per unit of volatility. If you would invest 57,000 in Capital Financial Indonesia on November 4, 2024 and sell it today you would earn a total of 5,500 from holding Capital Financial Indonesia or generate 9.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bank Victoria International vs. Capital Financial Indonesia
Performance |
| Timeline |
| Bank Victoria Intern |
| Capital Financial |
Bank Victoria and Capital Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank Victoria and Capital Financial
The main advantage of trading using opposite Bank Victoria and Capital Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank Victoria position performs unexpectedly, Capital Financial 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 Capital Financial will offset losses from the drop in Capital Financial's long position.| Bank Victoria vs. Bank Qnb Indonesia | Bank Victoria vs. Bank Mnc Internasional | Bank Victoria vs. Bank Bumi Arta | Bank Victoria vs. Bank Capital Indonesia |
| Capital Financial vs. Pacific Strategic Financial | Capital Financial vs. Bk Harda Internasional | Capital Financial vs. Indoritel Makmur Internasional | Capital Financial vs. Bank Sinarmas 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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