Correlation Between Pertamina Geothermal and Bank Central
Can any of the company-specific risk be diversified away by investing in both Pertamina Geothermal 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 Pertamina Geothermal and Bank Central into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pertamina Geothermal Energy and Bank Central Asia, you can compare the effects of market volatilities on Pertamina Geothermal 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 Pertamina Geothermal with a short position of Bank Central. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pertamina Geothermal and Bank Central.
Diversification Opportunities for Pertamina Geothermal and Bank Central
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Pertamina and Bank is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Pertamina Geothermal Energy 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 Pertamina Geothermal 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 Pertamina Geothermal Energy 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 Pertamina Geothermal i.e., Pertamina Geothermal and Bank Central go up and down completely randomly.
Pair Corralation between Pertamina Geothermal and Bank Central
Assuming the 90 days trading horizon Pertamina Geothermal Energy is expected to under-perform the Bank Central. In addition to that, Pertamina Geothermal is 1.49 times more volatile than Bank Central Asia. It trades about -0.06 of its total potential returns per unit of risk. Bank Central Asia is currently generating about 0.06 per unit of volatility. If you would invest 922,897 in Bank Central Asia on September 1, 2024 and sell it today you would earn a total of 77,103 from holding Bank Central Asia or generate 8.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pertamina Geothermal Energy vs. Bank Central Asia
Performance |
| Timeline |
| Pertamina Geothermal |
| Bank Central Asia |
Pertamina Geothermal and Bank Central Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pertamina Geothermal and Bank Central
The main advantage of trading using opposite Pertamina Geothermal and Bank Central positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pertamina Geothermal 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.| Pertamina Geothermal vs. Ashmore Asset Management | Pertamina Geothermal vs. HK Metals Utama | Pertamina Geothermal vs. Lotte Chemical Titan | Pertamina Geothermal vs. Diamond Food Indonesia |
| 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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