Correlation Between Merdeka Copper and Bank Cimb
Can any of the company-specific risk be diversified away by investing in both Merdeka Copper and Bank Cimb 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 Merdeka Copper and Bank Cimb into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Merdeka Copper Gold and Bank Cimb Niaga, you can compare the effects of market volatilities on Merdeka Copper and Bank Cimb 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 Merdeka Copper with a short position of Bank Cimb. Check out your portfolio center. Please also check ongoing floating volatility patterns of Merdeka Copper and Bank Cimb.
Diversification Opportunities for Merdeka Copper and Bank Cimb
0.48 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Merdeka and Bank is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Merdeka Copper Gold and Bank Cimb Niaga in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bank Cimb Niaga and Merdeka Copper 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 Merdeka Copper Gold are associated (or correlated) with Bank Cimb. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bank Cimb Niaga has no effect on the direction of Merdeka Copper i.e., Merdeka Copper and Bank Cimb go up and down completely randomly.
Pair Corralation between Merdeka Copper and Bank Cimb
Assuming the 90 days trading horizon Merdeka Copper Gold is expected to under-perform the Bank Cimb. In addition to that, Merdeka Copper is 2.19 times more volatile than Bank Cimb Niaga. It trades about -0.56 of its total potential returns per unit of risk. Bank Cimb Niaga is currently generating about -0.29 per unit of volatility. If you would invest 187,000 in Bank Cimb Niaga on September 1, 2024 and sell it today you would lose (11,500) from holding Bank Cimb Niaga or give up 6.15% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Merdeka Copper Gold vs. Bank Cimb Niaga
Performance |
| Timeline |
| Merdeka Copper Gold |
| Bank Cimb Niaga |
Merdeka Copper and Bank Cimb Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Merdeka Copper and Bank Cimb
The main advantage of trading using opposite Merdeka Copper and Bank Cimb positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Merdeka Copper position performs unexpectedly, Bank Cimb 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 Cimb will offset losses from the drop in Bank Cimb's long position.| Merdeka Copper vs. PT Sarana Menara | Merdeka Copper vs. Tower Bersama Infrastructure | Merdeka Copper vs. Pabrik Kertas Tjiwi | Merdeka Copper vs. Mitra Keluarga Karyasehat |
| Bank Cimb vs. Bank BRISyariah Tbk | Bank Cimb vs. Ace Hardware Indonesia | Bank Cimb vs. Merdeka Copper Gold | Bank Cimb vs. Mitra Pinasthika Mustika |
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 Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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