Correlation Between Optima Prima and Bank Central
Can any of the company-specific risk be diversified away by investing in both Optima Prima and Bank Central 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 Optima Prima and Bank Central into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Optima Prima Metal and Bank Central Asia, you can compare the effects of market volatilities on Optima Prima and Bank Central 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 Optima Prima with a short position of Bank Central. Check out your portfolio center. Please also check ongoing floating volatility patterns of Optima Prima and Bank Central.
Diversification Opportunities for Optima Prima and Bank Central
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Optima and Bank is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Optima Prima Metal and Bank Central Asia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bank Central Asia and Optima Prima 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 Optima Prima Metal are associated (or correlated) with Bank Central. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bank Central Asia has no effect on the direction of Optima Prima i.e., Optima Prima and Bank Central go up and down completely randomly.
Pair Corralation between Optima Prima and Bank Central
Assuming the 90 days trading horizon Optima Prima Metal is expected to under-perform the Bank Central. In addition to that, Optima Prima is 3.16 times more volatile than Bank Central Asia. It trades about -0.34 of its total potential returns per unit of risk. Bank Central Asia is currently generating about -0.1 per unit of volatility. If you would invest 1,029,864 in Bank Central Asia on August 31, 2024 and sell it today you would lose (29,864) from holding Bank Central Asia or give up 2.9% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Optima Prima Metal vs. Bank Central Asia
Performance |
| Timeline |
| Optima Prima Metal |
| Bank Central Asia |
Optima Prima and Bank Central Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Optima Prima and Bank Central
The main advantage of trading using opposite Optima Prima and Bank Central positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Optima Prima position performs unexpectedly, Bank Central 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 Central will offset losses from the drop in Bank Central's long position.| Optima Prima vs. Emdeki Utama Tbk | Optima Prima vs. Nusantara Almazia | Optima Prima vs. Sentral Mitra Informatika | Optima Prima vs. Darmi Bersaudara Tbk |
| Bank Central vs. Bank Rakyat Indonesia | Bank Central vs. Bank Mandiri Persero | Bank Central vs. Bank Negara Indonesia | Bank Central vs. Astra International Tbk |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
Other Complementary Tools
| ETF Categories List of ETF categories grouped based on various criteria, such as the investment strategy or type of investments | |
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk | |
| Investing Opportunities Build portfolios using our predefined set of ideas and optimize them against your investing preferences | |
| Companies Directory Evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals | |
| Earnings Calls Check upcoming earnings announcements updated hourly across public exchanges |