Correlation Between Bank Yudha and Digital Mediatama

Can any of the company-specific risk be diversified away by investing in both Bank Yudha 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 Yudha 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 Yudha Bhakti and Digital Mediatama Maxima, you can compare the effects of market volatilities on Bank Yudha 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 Yudha with a short position of Digital Mediatama. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank Yudha and Digital Mediatama.

Diversification Opportunities for Bank Yudha and Digital Mediatama

-0.58

Correlation Coefficient

Bank Yudha  Digital Mediatama

Excellent diversification

The 3 months correlation between Bank and Digital is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Bank Yudha Bhakti 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 Yudha 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 Yudha Bhakti 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 Yudha i.e., Bank Yudha and Digital Mediatama go up and down completely randomly.

Pair Corralation between Bank Yudha and Digital Mediatama

Assuming the 90 days trading horizon Bank Yudha Bhakti is expected to generate 0.91 times more return on investment than Digital Mediatama. However, Bank Yudha Bhakti is 1.1 times less risky than Digital Mediatama. It trades about -0.03 of its potential returns per unit of risk. Digital Mediatama Maxima is currently generating about -0.05 per unit of risk. If you would invest  67,500  in Bank Yudha Bhakti on September 1, 2024 and sell it today you would lose (41,500) from holding Bank Yudha Bhakti or give up 61.48% of portfolio value over 90 days.

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

Bank Yudha Bhakti  vs.  Digital Mediatama Maxima

Bank Yudha Bhakti

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bank Yudha Bhakti 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 December 2024. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Digital Mediatama Maxima

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Digital Mediatama Maxima are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Digital Mediatama disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Bank Yudha and Digital Mediatama

The main advantage of trading using opposite Bank Yudha and Digital Mediatama positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank Yudha 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.

The idea behind Bank Yudha Bhakti and Digital Mediatama Maxima 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.