Correlation Between Indosat Tbk and Bank Maybank
Can any of the company-specific risk be diversified away by investing in both Indosat Tbk and Bank Maybank 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 Indosat Tbk and Bank Maybank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Indosat Tbk and Bank Maybank Indonesia, you can compare the effects of market volatilities on Indosat Tbk and Bank Maybank 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 Indosat Tbk with a short position of Bank Maybank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Indosat Tbk and Bank Maybank.
Diversification Opportunities for Indosat Tbk and Bank Maybank
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Indosat and Bank is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Indosat Tbk and Bank Maybank Indonesia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bank Maybank Indonesia and Indosat Tbk 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 Indosat Tbk are associated (or correlated) with Bank Maybank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bank Maybank Indonesia has no effect on the direction of Indosat Tbk i.e., Indosat Tbk and Bank Maybank go up and down completely randomly.
Pair Corralation between Indosat Tbk and Bank Maybank
Assuming the 90 days trading horizon Indosat Tbk is expected to generate 3.47 times more return on investment than Bank Maybank. However, Indosat Tbk is 3.47 times more volatile than Bank Maybank Indonesia. It trades about -0.02 of its potential returns per unit of risk. Bank Maybank Indonesia is currently generating about -0.25 per unit of risk. If you would invest 250,000 in Indosat Tbk on September 1, 2024 and sell it today you would lose (7,000) from holding Indosat Tbk or give up 2.8% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Indosat Tbk vs. Bank Maybank Indonesia
Performance |
| Timeline |
| Indosat Tbk |
| Bank Maybank Indonesia |
Indosat Tbk and Bank Maybank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Indosat Tbk and Bank Maybank
The main advantage of trading using opposite Indosat Tbk and Bank Maybank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Indosat Tbk position performs unexpectedly, Bank Maybank 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 Maybank will offset losses from the drop in Bank Maybank's long position.| Indosat Tbk vs. Astra Agro Lestari | Indosat Tbk vs. Vale Indonesia Tbk | Indosat Tbk vs. Timah Persero Tbk | Indosat Tbk vs. Medco Energi Internasional |
| Bank Maybank vs. Bank Cimb Niaga | Bank Maybank vs. Bank Danamon Indonesia | Bank Maybank vs. Bank Pan Indonesia | Bank Maybank vs. Bank Permata 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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