Correlation Between Bank Negara and Prasidha Aneka

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

Diversification Opportunities for Bank Negara and Prasidha Aneka

-0.01

Correlation Coefficient

Bank Negara  Prasidha Aneka

Good diversification

The 3 months correlation between Bank and Prasidha is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Bank Negara Indonesia and Prasidha Aneka Niaga in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prasidha Aneka Niaga 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 Prasidha Aneka. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Prasidha Aneka Niaga has no effect on the direction of Bank Negara i.e., Bank Negara and Prasidha Aneka go up and down completely randomly.

Pair Corralation between Bank Negara and Prasidha Aneka

Assuming the 90 days trading horizon Bank Negara Indonesia is expected to under-perform the Prasidha Aneka. But the stock apears to be less risky and, when comparing its historical volatility, Bank Negara Indonesia is 1.85 times less risky than Prasidha Aneka. The stock trades about -0.08 of its potential returns per unit of risk. The Prasidha Aneka Niaga is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  8,100  in Prasidha Aneka Niaga on November 30, 2024 and sell it today you would earn a total of  100.00  from holding Prasidha Aneka Niaga or generate 1.23% return on investment over 90 days.

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

Bank Negara Indonesia  vs.  Prasidha Aneka Niaga

Bank Negara Indonesia

Risk-Adjusted Performance

Very Weak

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

Prasidha Aneka Niaga

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Prasidha Aneka Niaga are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite quite weak forward-looking signals, Prasidha Aneka may actually be approaching a critical reversion point that can send shares even higher in March 2025.

Pair Trading with Bank Negara and Prasidha Aneka

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

The idea behind Bank Negara Indonesia and Prasidha Aneka Niaga 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.