Correlation Between Bank Negara and Digital Mediatama
Can any of the company-specific risk be diversified away by investing in both Bank Negara and Digital Mediatama 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 Digital Mediatama 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 Digital Mediatama Maxima, you can compare the effects of market volatilities on Bank Negara and Digital Mediatama 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 Digital Mediatama. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank Negara and Digital Mediatama.
Diversification Opportunities for Bank Negara and Digital Mediatama
-0.43 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Bank and Digital is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Bank Negara Indonesia and Digital Mediatama Maxima in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Digital Mediatama Maxima 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 Digital Mediatama. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Digital Mediatama Maxima has no effect on the direction of Bank Negara i.e., Bank Negara and Digital Mediatama go up and down completely randomly.
Pair Corralation between Bank Negara and Digital Mediatama
Assuming the 90 days trading horizon Bank Negara is expected to generate 75.35 times less return on investment than Digital Mediatama. But when comparing it to its historical volatility, Bank Negara Indonesia is 1.52 times less risky than Digital Mediatama. It trades about 0.0 of its potential returns per unit of risk. Digital Mediatama Maxima is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 24,600 in Digital Mediatama Maxima on December 30, 2024 and sell it today you would earn a total of 13,000 from holding Digital Mediatama Maxima or generate 52.85% 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. Digital Mediatama Maxima
Performance |
Timeline |
Bank Negara Indonesia |
Digital Mediatama Maxima |
Bank Negara and Digital Mediatama Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Bank Negara and Digital Mediatama
The main advantage of trading using opposite Bank Negara and Digital Mediatama positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank Negara position performs unexpectedly, Digital Mediatama 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 Digital Mediatama will offset losses from the drop in Digital Mediatama's long position.Bank Negara vs. Bank Mandiri Persero | Bank Negara vs. Bank Rakyat Indonesia | Bank Negara vs. Bank Central Asia | Bank Negara 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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