Correlation Between Bank Woori and Bank Mega
Can any of the company-specific risk be diversified away by investing in both Bank Woori and Bank Mega 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 Woori and Bank Mega into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bank Woori Saudara and Bank Mega Tbk, you can compare the effects of market volatilities on Bank Woori and Bank Mega 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 Woori with a short position of Bank Mega. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank Woori and Bank Mega.
Diversification Opportunities for Bank Woori and Bank Mega
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Bank and Bank is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Bank Woori Saudara and Bank Mega Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bank Mega Tbk and Bank Woori 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 Woori Saudara are associated (or correlated) with Bank Mega. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bank Mega Tbk has no effect on the direction of Bank Woori i.e., Bank Woori and Bank Mega go up and down completely randomly.
Pair Corralation between Bank Woori and Bank Mega
Assuming the 90 days trading horizon Bank Woori Saudara is expected to under-perform the Bank Mega. But the stock apears to be less risky and, when comparing its historical volatility, Bank Woori Saudara is 1.36 times less risky than Bank Mega. The stock trades about -0.04 of its potential returns per unit of risk. The Bank Mega Tbk is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 470,372 in Bank Mega Tbk on August 31, 2024 and sell it today you would earn a total of 9,628 from holding Bank Mega Tbk or generate 2.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.72% |
| Values | Daily Returns |
Bank Woori Saudara vs. Bank Mega Tbk
Performance |
| Timeline |
| Bank Woori Saudara |
| Bank Mega Tbk |
Bank Woori and Bank Mega Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank Woori and Bank Mega
The main advantage of trading using opposite Bank Woori and Bank Mega positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank Woori position performs unexpectedly, Bank Mega 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 Bank Mega will offset losses from the drop in Bank Mega's long position.| Bank Woori vs. Bank Ocbc Nisp | Bank Woori vs. Bank Pan Indonesia | Bank Woori vs. Bank Mega Tbk | Bank Woori vs. Bank Mayapada Internasional |
| Bank Mega vs. Bank Ocbc Nisp | Bank Mega vs. Bank Mayapada Internasional | Bank Mega vs. Bank Permata Tbk | Bank Mega vs. Bank Pan Indonesia |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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