Correlation Between Indonesian Tobacco and Bank Ocbc
Can any of the company-specific risk be diversified away by investing in both Indonesian Tobacco and Bank Ocbc 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 Indonesian Tobacco and Bank Ocbc into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Indonesian Tobacco Tbk and Bank Ocbc Nisp, you can compare the effects of market volatilities on Indonesian Tobacco and Bank Ocbc 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 Indonesian Tobacco with a short position of Bank Ocbc. Check out your portfolio center. Please also check ongoing floating volatility patterns of Indonesian Tobacco and Bank Ocbc.
Diversification Opportunities for Indonesian Tobacco and Bank Ocbc
0.13 | Correlation Coefficient |
Average diversification
The 3 months correlation between Indonesian and Bank is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Indonesian Tobacco Tbk and Bank Ocbc Nisp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bank Ocbc Nisp and Indonesian Tobacco 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 Indonesian Tobacco Tbk are associated (or correlated) with Bank Ocbc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bank Ocbc Nisp has no effect on the direction of Indonesian Tobacco i.e., Indonesian Tobacco and Bank Ocbc go up and down completely randomly.
Pair Corralation between Indonesian Tobacco and Bank Ocbc
Assuming the 90 days trading horizon Indonesian Tobacco Tbk is expected to under-perform the Bank Ocbc. In addition to that, Indonesian Tobacco is 2.39 times more volatile than Bank Ocbc Nisp. It trades about -0.03 of its total potential returns per unit of risk. Bank Ocbc Nisp is currently generating about 0.07 per unit of volatility. If you would invest 133,500 in Bank Ocbc Nisp on August 30, 2024 and sell it today you would earn a total of 1,500 from holding Bank Ocbc Nisp or generate 1.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Indonesian Tobacco Tbk vs. Bank Ocbc Nisp
Performance |
| Timeline |
| Indonesian Tobacco Tbk |
| Bank Ocbc Nisp |
Indonesian Tobacco and Bank Ocbc Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Indonesian Tobacco and Bank Ocbc
The main advantage of trading using opposite Indonesian Tobacco and Bank Ocbc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Indonesian Tobacco position performs unexpectedly, Bank Ocbc 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 Ocbc will offset losses from the drop in Bank Ocbc's long position.| Indonesian Tobacco vs. Wismilak Inti Makmur | Indonesian Tobacco vs. J Resources Asia | Indonesian Tobacco vs. Transcoal Pacific Tbk | Indonesian Tobacco vs. Garudafood Putra Putri |
| Bank Ocbc vs. Bank Mega Tbk | Bank Ocbc vs. Bank Pan Indonesia | Bank Ocbc vs. Bank Permata Tbk | Bank Ocbc vs. Bank Cimb Niaga |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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