Correlation Between Lenox Pasifik and Bank Permata
Can any of the company-specific risk be diversified away by investing in both Lenox Pasifik 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 Lenox Pasifik and Bank Permata into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lenox Pasifik Investama and Bank Permata Tbk, you can compare the effects of market volatilities on Lenox Pasifik 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 Lenox Pasifik with a short position of Bank Permata. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lenox Pasifik and Bank Permata.
Diversification Opportunities for Lenox Pasifik and Bank Permata
-0.04 | Correlation Coefficient |
Good diversification
The 3 months correlation between Lenox and Bank is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Lenox Pasifik Investama 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 Lenox Pasifik 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 Lenox Pasifik Investama 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 Lenox Pasifik i.e., Lenox Pasifik and Bank Permata go up and down completely randomly.
Pair Corralation between Lenox Pasifik and Bank Permata
Assuming the 90 days trading horizon Lenox Pasifik is expected to generate 1.67 times less return on investment than Bank Permata. In addition to that, Lenox Pasifik is 1.35 times more volatile than Bank Permata Tbk. It trades about 0.0 of its total potential returns per unit of risk. Bank Permata Tbk is currently generating about 0.01 per unit of volatility. If you would invest 106,923 in Bank Permata Tbk on August 27, 2024 and sell it today you would lose (5,923) from holding Bank Permata Tbk or give up 5.54% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lenox Pasifik Investama vs. Bank Permata Tbk
Performance |
| Timeline |
| Lenox Pasifik Investama |
| Bank Permata Tbk |
Lenox Pasifik and Bank Permata Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lenox Pasifik and Bank Permata
The main advantage of trading using opposite Lenox Pasifik and Bank Permata positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lenox Pasifik 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.The idea behind Lenox Pasifik Investama and Bank Permata Tbk pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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