Correlation Between Bank Pembangunan and Indosterling Technomedia

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

Diversification Opportunities for Bank Pembangunan and Indosterling Technomedia

0.0

Correlation Coefficient

Bank Pembangunan  Indosterling Technomedia

Pay attention - limited upside

The 3 months correlation between Bank and Indosterling is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Bank Pembangunan Daerah and Indosterling Technomedia Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Indosterling Technomedia 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 Indosterling Technomedia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Indosterling Technomedia has no effect on the direction of Bank Pembangunan i.e., Bank Pembangunan and Indosterling Technomedia go up and down completely randomly.

Pair Corralation between Bank Pembangunan and Indosterling Technomedia

If you would invest  2,300  in Bank Pembangunan Daerah on September 4, 2024 and sell it today you would earn a total of  700.00  from holding Bank Pembangunan Daerah or generate 30.43% return on investment over 90 days.

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

Bank Pembangunan Daerah  vs.  Indosterling Technomedia Tbk

Bank Pembangunan Daerah

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Bank Pembangunan Daerah are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Bank Pembangunan disclosed solid returns over the last few months and may actually be approaching a breakup point.

Indosterling Technomedia

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Indosterling Technomedia Tbk has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent forward-looking signals, Indosterling Technomedia is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Bank Pembangunan and Indosterling Technomedia

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

The idea behind Bank Pembangunan Daerah and Indosterling Technomedia Tbk 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.