Correlation Between Bank Negara and Pharming Group
Can any of the company-specific risk be diversified away by investing in both Bank Negara and Pharming Group 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 Pharming Group 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 Pharming Group NV, you can compare the effects of market volatilities on Bank Negara and Pharming Group 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 Pharming Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank Negara and Pharming Group.
Diversification Opportunities for Bank Negara and Pharming Group
-0.47 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Bank and Pharming is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Bank Negara Indonesia and Pharming Group NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pharming Group NV 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 Pharming Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pharming Group NV has no effect on the direction of Bank Negara i.e., Bank Negara and Pharming Group go up and down completely randomly.
Pair Corralation between Bank Negara and Pharming Group
Assuming the 90 days horizon Bank Negara Indonesia is expected to generate 4.98 times more return on investment than Pharming Group. However, Bank Negara is 4.98 times more volatile than Pharming Group NV. It trades about 0.09 of its potential returns per unit of risk. Pharming Group NV is currently generating about -0.04 per unit of risk. If you would invest 1,301 in Bank Negara Indonesia on October 23, 2024 and sell it today you would earn a total of 89.00 from holding Bank Negara Indonesia or generate 6.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 94.74% |
| Values | Daily Returns |
Bank Negara Indonesia vs. Pharming Group NV
Performance |
| Timeline |
| Bank Negara Indonesia |
| Pharming Group NV |
Bank Negara and Pharming Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank Negara and Pharming Group
The main advantage of trading using opposite Bank Negara and Pharming Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank Negara position performs unexpectedly, Pharming Group 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 Pharming Group will offset losses from the drop in Pharming Group'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 |
| Pharming Group vs. Garibaldi Resources Corp | Pharming Group vs. IGG Inc | Pharming Group vs. Sino Biopharmaceutical Limited |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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