Correlation Between Bank Mega and PT Winner
Can any of the company-specific risk be diversified away by investing in both Bank Mega and PT Winner 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 PT Winner 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 PT Winner Nusantara, you can compare the effects of market volatilities on Bank Mega and PT Winner 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 PT Winner. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank Mega and PT Winner.
Diversification Opportunities for Bank Mega and PT Winner
Poor diversification
The 3 months correlation between Bank and WINR is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Bank Mega Tbk and PT Winner Nusantara in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PT Winner Nusantara 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 PT Winner. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PT Winner Nusantara has no effect on the direction of Bank Mega i.e., Bank Mega and PT Winner go up and down completely randomly.
Pair Corralation between Bank Mega and PT Winner
Assuming the 90 days trading horizon Bank Mega Tbk is expected to generate 0.18 times more return on investment than PT Winner. However, Bank Mega Tbk is 5.54 times less risky than PT Winner. It trades about -0.11 of its potential returns per unit of risk. PT Winner Nusantara is currently generating about -0.1 per unit of risk. If you would invest 491,000 in Bank Mega Tbk on September 1, 2024 and sell it today you would lose (11,000) from holding Bank Mega Tbk or give up 2.24% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bank Mega Tbk vs. PT Winner Nusantara
Performance |
| Timeline |
| Bank Mega Tbk |
| PT Winner Nusantara |
Bank Mega and PT Winner Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank Mega and PT Winner
The main advantage of trading using opposite Bank Mega and PT Winner positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank Mega position performs unexpectedly, PT Winner 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 PT Winner will offset losses from the drop in PT Winner'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 |
| PT Winner vs. Pollux Properti Indonesia | PT Winner vs. Jaya Sukses Makmur | PT Winner vs. Natura City Developments | PT Winner vs. Maha Properti 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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