Correlation Between Deutsche Bank and Bank Negara
Can any of the company-specific risk be diversified away by investing in both Deutsche Bank and Bank Negara 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 Deutsche Bank and Bank Negara into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Deutsche Bank AG and Bank Negara Indonesia, you can compare the effects of market volatilities on Deutsche Bank and Bank Negara 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 Deutsche Bank with a short position of Bank Negara. Check out your portfolio center. Please also check ongoing floating volatility patterns of Deutsche Bank and Bank Negara.
Diversification Opportunities for Deutsche Bank and Bank Negara
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Deutsche and Bank is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Deutsche Bank AG and Bank Negara Indonesia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bank Negara Indonesia and Deutsche Bank 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 Deutsche Bank AG are associated (or correlated) with Bank Negara. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bank Negara Indonesia has no effect on the direction of Deutsche Bank i.e., Deutsche Bank and Bank Negara go up and down completely randomly.
Pair Corralation between Deutsche Bank and Bank Negara
Allowing for the 90-day total investment horizon Deutsche Bank is expected to generate 1.23 times less return on investment than Bank Negara. But when comparing it to its historical volatility, Deutsche Bank AG is 3.35 times less risky than Bank Negara. It trades about 0.08 of its potential returns per unit of risk. Bank Negara Indonesia is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 1,586 in Bank Negara Indonesia on August 31, 2024 and sell it today you would lose (93.00) from holding Bank Negara Indonesia or give up 5.86% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Deutsche Bank AG vs. Bank Negara Indonesia
Performance |
| Timeline |
| Deutsche Bank AG |
| Bank Negara Indonesia |
Deutsche Bank and Bank Negara Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Deutsche Bank and Bank Negara
The main advantage of trading using opposite Deutsche Bank and Bank Negara positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Deutsche Bank position performs unexpectedly, Bank Negara 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 Negara will offset losses from the drop in Bank Negara's long position.| Deutsche Bank vs. Banco Bradesco SA | Deutsche Bank vs. Itau Unibanco Banco | Deutsche Bank vs. Lloyds Banking Group | Deutsche Bank vs. Banco Santander Brasil |
| Bank Negara vs. Banco Bradesco SA | Bank Negara vs. Itau Unibanco Banco | Bank Negara vs. Lloyds Banking Group | Bank Negara vs. Deutsche Bank AG |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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