Correlation Between Bank Mestika and Asuransi Kresna

Can any of the company-specific risk be diversified away by investing in both Bank Mestika and Asuransi Kresna 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 Mestika and Asuransi Kresna into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Bank Mestika Dharma and Asuransi Kresna Mitra, you can compare the effects of market volatilities on Bank Mestika and Asuransi Kresna 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 Mestika with a short position of Asuransi Kresna. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank Mestika and Asuransi Kresna.

Diversification Opportunities for Bank Mestika and Asuransi Kresna

0.11

Correlation Coefficient

Bank Mestika  Asuransi Kresna

Average diversification

The 3 months correlation between Bank and Asuransi is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Bank Mestika Dharma and Asuransi Kresna Mitra in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Asuransi Kresna Mitra and Bank Mestika 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 Mestika Dharma are associated (or correlated) with Asuransi Kresna. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Asuransi Kresna Mitra has no effect on the direction of Bank Mestika i.e., Bank Mestika and Asuransi Kresna go up and down completely randomly.

Pair Corralation between Bank Mestika and Asuransi Kresna

Assuming the 90 days trading horizon Bank Mestika Dharma is expected to generate 0.33 times more return on investment than Asuransi Kresna. However, Bank Mestika Dharma is 3.07 times less risky than Asuransi Kresna. It trades about 0.01 of its potential returns per unit of risk. Asuransi Kresna Mitra is currently generating about -0.04 per unit of risk. If you would invest  188,241  in Bank Mestika Dharma on October 23, 2024 and sell it today you would lose (4,741) from holding Bank Mestika Dharma or give up 2.52% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	99.79%
Values	Daily Returns

Bank Mestika Dharma  vs.  Asuransi Kresna Mitra

Bank Mestika Dharma

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bank Mestika Dharma 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.

Asuransi Kresna Mitra

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Asuransi Kresna Mitra are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Asuransi Kresna disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Bank Mestika and Asuransi Kresna

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

The idea behind Bank Mestika Dharma and Asuransi Kresna Mitra 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.