Correlation Between Bank Pembangunan and Asuransi Harta

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

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

Diversification Opportunities for Bank Pembangunan and Asuransi Harta

0.89

Correlation Coefficient

Bank Pembangunan  Asuransi Harta

Very poor diversification

The 3 months correlation between Bank and Asuransi is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Bank Pembangunan Daerah and Asuransi Harta Aman in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Asuransi Harta Aman and Bank Pembangunan 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 Pembangunan Daerah are associated (or correlated) with Asuransi Harta. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Asuransi Harta Aman has no effect on the direction of Bank Pembangunan i.e., Bank Pembangunan and Asuransi Harta go up and down completely randomly.

Pair Corralation between Bank Pembangunan and Asuransi Harta

Assuming the 90 days trading horizon Bank Pembangunan Daerah is expected to under-perform the Asuransi Harta. In addition to that, Bank Pembangunan is 2.14 times more volatile than Asuransi Harta Aman. It trades about -0.15 of its total potential returns per unit of risk. Asuransi Harta Aman is currently generating about -0.2 per unit of volatility. If you would invest  9,100  in Asuransi Harta Aman on December 2, 2024 and sell it today you would lose (1,700) from holding Asuransi Harta Aman or give up 18.68% of portfolio value over 90 days.

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

Bank Pembangunan Daerah  vs.  Asuransi Harta Aman

Bank Pembangunan Daerah

Risk-Adjusted Performance

Very Weak

Over the last 90 days Bank Pembangunan Daerah 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 April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Asuransi Harta Aman

Risk-Adjusted Performance

Very Weak

Over the last 90 days Asuransi Harta Aman 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 April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Bank Pembangunan and Asuransi Harta

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

The idea behind Bank Pembangunan Daerah and Asuransi Harta Aman 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.