Correlation Between Bank Central and Garda Tujuh
Can any of the company-specific risk be diversified away by investing in both Bank Central and Garda Tujuh 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 Central and Garda Tujuh into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bank Central Asia and Garda Tujuh Buana, you can compare the effects of market volatilities on Bank Central and Garda Tujuh 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 Central with a short position of Garda Tujuh. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank Central and Garda Tujuh.
Diversification Opportunities for Bank Central and Garda Tujuh
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Bank and Garda is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Bank Central Asia and Garda Tujuh Buana in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Garda Tujuh Buana and Bank Central 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 Central Asia are associated (or correlated) with Garda Tujuh. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Garda Tujuh Buana has no effect on the direction of Bank Central i.e., Bank Central and Garda Tujuh go up and down completely randomly.
Pair Corralation between Bank Central and Garda Tujuh
Assuming the 90 days trading horizon Bank Central Asia is expected to generate 0.69 times more return on investment than Garda Tujuh. However, Bank Central Asia is 1.45 times less risky than Garda Tujuh. It trades about -0.12 of its potential returns per unit of risk. Garda Tujuh Buana is currently generating about -0.28 per unit of risk. If you would invest 975,000 in Bank Central Asia on December 2, 2024 and sell it today you would lose (125,000) from holding Bank Central Asia or give up 12.82% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Strong |
Accuracy | 100.0% |
Values | Daily Returns |
Bank Central Asia vs. Garda Tujuh Buana
Performance |
Timeline |
Bank Central Asia |
Garda Tujuh Buana |
Bank Central and Garda Tujuh Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Bank Central and Garda Tujuh
The main advantage of trading using opposite Bank Central and Garda Tujuh positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank Central position performs unexpectedly, Garda Tujuh 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 Garda Tujuh will offset losses from the drop in Garda Tujuh's long position.Bank Central vs. Bank Rakyat Indonesia | Bank Central vs. Bank Mandiri Persero | Bank Central vs. Bank Negara Indonesia | Bank Central vs. Astra International Tbk |
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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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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