Correlation Between Bank Negara and ECN Capital
Can any of the company-specific risk be diversified away by investing in both Bank Negara and ECN Capital 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 ECN Capital 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 ECN Capital Corp, you can compare the effects of market volatilities on Bank Negara and ECN Capital 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 ECN Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank Negara and ECN Capital.
Diversification Opportunities for Bank Negara and ECN Capital
-0.75 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Bank and ECN is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding Bank Negara Indonesia and ECN Capital Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ECN Capital Corp 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 ECN Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ECN Capital Corp has no effect on the direction of Bank Negara i.e., Bank Negara and ECN Capital go up and down completely randomly.
Pair Corralation between Bank Negara and ECN Capital
Assuming the 90 days horizon Bank Negara Indonesia is expected to under-perform the ECN Capital. In addition to that, Bank Negara is 2.33 times more volatile than ECN Capital Corp. It trades about -0.05 of its total potential returns per unit of risk. ECN Capital Corp is currently generating about -0.08 per unit of volatility. If you would invest 211.00 in ECN Capital Corp on September 14, 2024 and sell it today you would lose (8.00) from holding ECN Capital Corp or give up 3.79% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bank Negara Indonesia vs. ECN Capital Corp
Performance |
| Timeline |
| Bank Negara Indonesia |
| ECN Capital Corp |
Bank Negara and ECN Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank Negara and ECN Capital
The main advantage of trading using opposite Bank Negara and ECN Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank Negara position performs unexpectedly, ECN Capital 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 ECN Capital will offset losses from the drop in ECN Capital'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 |
| ECN Capital vs. PennyMac Finl Svcs | ECN Capital vs. Velocity Financial Llc | ECN Capital vs. Encore Capital Group | ECN Capital vs. Greystone Housing Impact |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
Other Complementary Tools
| Equity Search Search for actively traded equities including funds and ETFs from over 30 global markets | |
| Investing Opportunities Build portfolios using our predefined set of ideas and optimize them against your investing preferences | |
| Funds Screener Find actively-traded funds from around the world traded on over 30 global exchanges | |
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm | |
| Analyst Advice Analyst recommendations and target price estimates broken down by several categories |