Correlation Between Bank Negara and STEP Energy
Can any of the company-specific risk be diversified away by investing in both Bank Negara and STEP Energy 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 STEP Energy 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 STEP Energy Services, you can compare the effects of market volatilities on Bank Negara and STEP Energy 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 STEP Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank Negara and STEP Energy.
Diversification Opportunities for Bank Negara and STEP Energy
-0.71 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Bank and STEP is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding Bank Negara Indonesia and STEP Energy Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on STEP Energy Services 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 STEP Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of STEP Energy Services has no effect on the direction of Bank Negara i.e., Bank Negara and STEP Energy go up and down completely randomly.
Pair Corralation between Bank Negara and STEP Energy
Assuming the 90 days horizon Bank Negara Indonesia is expected to generate 1.61 times more return on investment than STEP Energy. However, Bank Negara is 1.61 times more volatile than STEP Energy Services. It trades about 0.03 of its potential returns per unit of risk. STEP Energy Services is currently generating about 0.02 per unit of risk. If you would invest 1,401 in Bank Negara Indonesia on September 2, 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 Against |
| Strength | Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
Bank Negara Indonesia vs. STEP Energy Services
Performance |
| Timeline |
| Bank Negara Indonesia |
| STEP Energy Services |
Bank Negara and STEP Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank Negara and STEP Energy
The main advantage of trading using opposite Bank Negara and STEP Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank Negara position performs unexpectedly, STEP Energy 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 STEP Energy will offset losses from the drop in STEP Energy's long position.| Bank Negara vs. Piraeus Bank SA | Bank Negara vs. Turkiye Garanti Bankasi | Bank Negara vs. Uwharrie Capital Corp |
| STEP Energy vs. Total Energy Services | STEP Energy vs. Trican Well Service | STEP Energy vs. Koil Energy Solutions | STEP Energy vs. TerraVest Industries |
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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