Correlation Between Bank Negara and Urbana
Can any of the company-specific risk be diversified away by investing in both Bank Negara and Urbana 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 Urbana 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 Urbana, you can compare the effects of market volatilities on Bank Negara and Urbana 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 Urbana. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank Negara and Urbana.
Diversification Opportunities for Bank Negara and Urbana
-0.58 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Bank and Urbana is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Bank Negara Indonesia and Urbana in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Urbana 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 Urbana. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Urbana has no effect on the direction of Bank Negara i.e., Bank Negara and Urbana go up and down completely randomly.
Pair Corralation between Bank Negara and Urbana
Assuming the 90 days horizon Bank Negara Indonesia is expected to under-perform the Urbana. In addition to that, Bank Negara is 2.92 times more volatile than Urbana. It trades about -0.04 of its total potential returns per unit of risk. Urbana is currently generating about 0.13 per unit of volatility. If you would invest 387.00 in Urbana on August 31, 2024 and sell it today you would earn a total of 16.00 from holding Urbana or generate 4.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bank Negara Indonesia vs. Urbana
Performance |
| Timeline |
| Bank Negara Indonesia |
| Urbana |
Bank Negara and Urbana Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank Negara and Urbana
The main advantage of trading using opposite Bank Negara and Urbana positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank Negara position performs unexpectedly, Urbana 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 Urbana will offset losses from the drop in Urbana'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 |
| Urbana vs. Blackhawk Growth Corp | Urbana vs. Guardian Capital Group | Urbana vs. Flow Capital Corp | Urbana vs. Princeton Capital |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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