Correlation Between Indosat Tbk and Bank Permata
Can any of the company-specific risk be diversified away by investing in both Indosat Tbk and Bank Permata 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 Permata 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 Permata Tbk, you can compare the effects of market volatilities on Indosat Tbk and Bank Permata 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 Permata. Check out your portfolio center. Please also check ongoing floating volatility patterns of Indosat Tbk and Bank Permata.
Diversification Opportunities for Indosat Tbk and Bank Permata
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Indosat and Bank is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Indosat Tbk and Bank Permata Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bank Permata Tbk 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 Permata. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bank Permata Tbk has no effect on the direction of Indosat Tbk i.e., Indosat Tbk and Bank Permata go up and down completely randomly.
Pair Corralation between Indosat Tbk and Bank Permata
Assuming the 90 days trading horizon Indosat Tbk is expected to under-perform the Bank Permata. In addition to that, Indosat Tbk is 1.62 times more volatile than Bank Permata Tbk. It trades about -0.08 of its total potential returns per unit of risk. Bank Permata Tbk is currently generating about 0.03 per unit of volatility. If you would invest 90,500 in Bank Permata Tbk on September 1, 2024 and sell it today you would earn a total of 7,000 from holding Bank Permata Tbk or generate 7.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Indosat Tbk vs. Bank Permata Tbk
Performance |
| Timeline |
| Indosat Tbk |
| Bank Permata Tbk |
Indosat Tbk and Bank Permata Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Indosat Tbk and Bank Permata
The main advantage of trading using opposite Indosat Tbk and Bank Permata positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Indosat Tbk position performs unexpectedly, Bank Permata 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 Permata will offset losses from the drop in Bank Permata'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 Permata vs. Bank Cimb Niaga | Bank Permata vs. Bank Maybank Indonesia | Bank Permata vs. Bank Danamon Indonesia | Bank Permata vs. Bank Pan 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.
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