Correlation Between Bank Negara and Bayport International
Can any of the company-specific risk be diversified away by investing in both Bank Negara and Bayport International 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 Negara and Bayport International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bank Negara Indonesia and Bayport International Holdings, you can compare the effects of market volatilities on Bank Negara and Bayport International 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 Negara with a short position of Bayport International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank Negara and Bayport International.
Diversification Opportunities for Bank Negara and Bayport International
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Bank and Bayport is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Bank Negara Indonesia and Bayport International Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bayport International and Bank Negara 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 Negara Indonesia are associated (or correlated) with Bayport International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bayport International has no effect on the direction of Bank Negara i.e., Bank Negara and Bayport International go up and down completely randomly.
Pair Corralation between Bank Negara and Bayport International
Assuming the 90 days horizon Bank Negara is expected to generate 35.3 times less return on investment than Bayport International. But when comparing it to its historical volatility, Bank Negara Indonesia is 12.91 times less risky than Bayport International. It trades about 0.03 of its potential returns per unit of risk. Bayport International Holdings is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 0.80 in Bayport International Holdings on November 2, 2024 and sell it today you would lose (0.79) from holding Bayport International Holdings or give up 98.75% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bank Negara Indonesia vs. Bayport International Holdings
Performance |
| Timeline |
| Bank Negara Indonesia |
| Bayport International |
Bank Negara and Bayport International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank Negara and Bayport International
The main advantage of trading using opposite Bank Negara and Bayport International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank Negara position performs unexpectedly, Bayport International 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 Bayport International will offset losses from the drop in Bayport International's long position.| Bank Negara vs. Banco Bradesco SA | Bank Negara vs. Itau Unibanco Banco | Bank Negara vs. Lloyds Banking Group | Bank Negara vs. Deutsche Bank AG |
| Bayport International vs. Hong Kong Land | Bayport International vs. Wharf Holdings | Bayport International vs. Holiday Island Holdings | Bayport International vs. Sun Hung Kai |
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
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated | |
| CEOs Directory Screen CEOs from public companies around the world | |
| Odds Of Bankruptcy Get analysis of equity chance of financial distress in the next 2 years | |
| Positions Ratings Determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Stock Tickers Use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites |