Correlation Between Bank Negara and Independence Contract
Can any of the company-specific risk be diversified away by investing in both Bank Negara and Independence Contract 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 Independence Contract 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 Independence Contract Drilling, you can compare the effects of market volatilities on Bank Negara and Independence Contract 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 Independence Contract. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank Negara and Independence Contract.
Diversification Opportunities for Bank Negara and Independence Contract
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Bank and Independence is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Bank Negara Indonesia and Independence Contract Drilling in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Independence Contract 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 Independence Contract. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Independence Contract has no effect on the direction of Bank Negara i.e., Bank Negara and Independence Contract go up and down completely randomly.
Pair Corralation between Bank Negara and Independence Contract
Assuming the 90 days horizon Bank Negara Indonesia is expected to generate 0.86 times more return on investment than Independence Contract. However, Bank Negara Indonesia is 1.17 times less risky than Independence Contract. It trades about 0.03 of its potential returns per unit of risk. Independence Contract Drilling is currently generating about -0.09 per unit of risk. If you would invest 1,401 in Bank Negara Indonesia on September 3, 2024 and sell it today you would earn a total of 144.00 from holding Bank Negara Indonesia or generate 10.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 87.07% |
| Values | Daily Returns |
Bank Negara Indonesia vs. Independence Contract Drilling
Performance |
| Timeline |
| Bank Negara Indonesia |
| Independence Contract |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Bank Negara and Independence Contract Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank Negara and Independence Contract
The main advantage of trading using opposite Bank Negara and Independence Contract positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank Negara position performs unexpectedly, Independence Contract 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 Independence Contract will offset losses from the drop in Independence Contract's long position.| Bank Negara vs. First Hawaiian | Bank Negara vs. Central Pacific Financial | Bank Negara vs. Territorial Bancorp | Bank Negara vs. Comerica |
| Independence Contract vs. Forum Energy Technologies | Independence Contract vs. KLX Energy Services | Independence Contract vs. Mammoth Energy Services | Independence Contract vs. Borr Drilling |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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