Correlation Between Bank Central and PT Indo

Can any of the company-specific risk be diversified away by investing in both Bank Central and PT Indo 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 PT Indo 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 PT Indo Boga, you can compare the effects of market volatilities on Bank Central and PT Indo 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 PT Indo. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank Central and PT Indo.

Diversification Opportunities for Bank Central and PT Indo

0.6

Correlation Coefficient

Bank Central  PT Indo

Poor diversification

The 3 months correlation between Bank and IBOS is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Bank Central Asia and PT Indo Boga in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PT Indo Boga 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 PT Indo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PT Indo Boga has no effect on the direction of Bank Central i.e., Bank Central and PT Indo go up and down completely randomly.

Pair Corralation between Bank Central and PT Indo

Assuming the 90 days trading horizon Bank Central Asia is expected to under-perform the PT Indo. But the stock apears to be less risky and, when comparing its historical volatility, Bank Central Asia is 4.77 times less risky than PT Indo. The stock trades about -0.06 of its potential returns per unit of risk. The PT Indo Boga is currently generating about 0.32 of returns per unit of risk over similar time horizon. If you would invest  2,800  in PT Indo Boga on October 25, 2024 and sell it today you would earn a total of  1,300  from holding PT Indo Boga or generate 46.43% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Bank Central Asia  vs.  PT Indo Boga

Bank Central Asia

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bank Central Asia has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's forward-looking signals remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

PT Indo Boga

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PT Indo Boga has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's forward-looking signals remain quite persistent which may send shares a bit higher in February 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Bank Central and PT Indo

The main advantage of trading using opposite Bank Central and PT Indo positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank Central position performs unexpectedly, PT Indo 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 PT Indo will offset losses from the drop in PT Indo's long position.

The idea behind Bank Central Asia and PT Indo Boga pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.