Correlation Between Benakat Petroleum and Bank Sinarmas

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

By analyzing existing cross correlation between Benakat Petroleum Energy and Bank Sinarmas Tbk, you can compare the effects of market volatilities on Benakat Petroleum and Bank Sinarmas 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 Benakat Petroleum with a short position of Bank Sinarmas. Check out your portfolio center. Please also check ongoing floating volatility patterns of Benakat Petroleum and Bank Sinarmas.

Diversification Opportunities for Benakat Petroleum and Bank Sinarmas

-0.08

Correlation Coefficient

Benakat Petroleum  Bank Sinarmas

Good diversification

The 3 months correlation between Benakat and Bank is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Benakat Petroleum Energy and Bank Sinarmas Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bank Sinarmas Tbk and Benakat Petroleum 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 Benakat Petroleum Energy are associated (or correlated) with Bank Sinarmas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bank Sinarmas Tbk has no effect on the direction of Benakat Petroleum i.e., Benakat Petroleum and Bank Sinarmas go up and down completely randomly.

Pair Corralation between Benakat Petroleum and Bank Sinarmas

Assuming the 90 days trading horizon Benakat Petroleum Energy is expected to under-perform the Bank Sinarmas. But the stock apears to be less risky and, when comparing its historical volatility, Benakat Petroleum Energy is 1.13 times less risky than Bank Sinarmas. The stock trades about -0.05 of its potential returns per unit of risk. The Bank Sinarmas Tbk is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  72,500  in Bank Sinarmas Tbk on December 1, 2024 and sell it today you would earn a total of  11,500  from holding Bank Sinarmas Tbk or generate 15.86% return on investment over 90 days.

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

Benakat Petroleum Energy  vs.  Bank Sinarmas Tbk

Benakat Petroleum Energy

Risk-Adjusted Performance

Very Weak

Over the last 90 days Benakat Petroleum Energy has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's forward-looking signals remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Bank Sinarmas Tbk

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Bank Sinarmas Tbk are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Bank Sinarmas disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Benakat Petroleum and Bank Sinarmas

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

The idea behind Benakat Petroleum Energy and Bank Sinarmas 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..