Correlation Between Bank Mega and Bhuwanatala Indah
Can any of the company-specific risk be diversified away by investing in both Bank Mega and Bhuwanatala Indah 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 Bank Mega and Bhuwanatala Indah into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bank Mega Tbk and Bhuwanatala Indah Permai, you can compare the effects of market volatilities on Bank Mega and Bhuwanatala Indah 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 Bank Mega with a short position of Bhuwanatala Indah. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank Mega and Bhuwanatala Indah.
Diversification Opportunities for Bank Mega and Bhuwanatala Indah
-0.67 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Bank and Bhuwanatala is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Bank Mega Tbk and Bhuwanatala Indah Permai in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bhuwanatala Indah Permai and Bank Mega 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 Bank Mega Tbk are associated (or correlated) with Bhuwanatala Indah. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bhuwanatala Indah Permai has no effect on the direction of Bank Mega i.e., Bank Mega and Bhuwanatala Indah go up and down completely randomly.
Pair Corralation between Bank Mega and Bhuwanatala Indah
Assuming the 90 days trading horizon Bank Mega Tbk is expected to generate 0.21 times more return on investment than Bhuwanatala Indah. However, Bank Mega Tbk is 4.74 times less risky than Bhuwanatala Indah. It trades about -0.31 of its potential returns per unit of risk. Bhuwanatala Indah Permai is currently generating about -0.28 per unit of risk. If you would invest 393,000 in Bank Mega Tbk on November 18, 2024 and sell it today you would lose (23,000) from holding Bank Mega Tbk or give up 5.85% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bank Mega Tbk vs. Bhuwanatala Indah Permai
Performance |
| Timeline |
| Bank Mega Tbk |
| Bhuwanatala Indah Permai |
Bank Mega and Bhuwanatala Indah Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank Mega and Bhuwanatala Indah
The main advantage of trading using opposite Bank Mega and Bhuwanatala Indah positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank Mega position performs unexpectedly, Bhuwanatala Indah 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 Bhuwanatala Indah will offset losses from the drop in Bhuwanatala Indah's long position.| Bank Mega vs. Bank Ocbc Nisp | Bank Mega vs. Bank Mayapada Internasional | Bank Mega vs. Bank Permata Tbk | Bank Mega vs. Bank Pan Indonesia |
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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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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