Correlation Between Bank Cimb and DCI Indonesia
Can any of the company-specific risk be diversified away by investing in both Bank Cimb and DCI Indonesia 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 Cimb and DCI Indonesia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bank Cimb Niaga and DCI Indonesia Tbk, you can compare the effects of market volatilities on Bank Cimb and DCI Indonesia 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 Cimb with a short position of DCI Indonesia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank Cimb and DCI Indonesia.
Diversification Opportunities for Bank Cimb and DCI Indonesia
-0.59 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Bank and DCI is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Bank Cimb Niaga and DCI Indonesia Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DCI Indonesia Tbk and Bank Cimb 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 Cimb Niaga are associated (or correlated) with DCI Indonesia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DCI Indonesia Tbk has no effect on the direction of Bank Cimb i.e., Bank Cimb and DCI Indonesia go up and down completely randomly.
Pair Corralation between Bank Cimb and DCI Indonesia
Assuming the 90 days trading horizon Bank Cimb Niaga is expected to under-perform the DCI Indonesia. But the stock apears to be less risky and, when comparing its historical volatility, Bank Cimb Niaga is 7.79 times less risky than DCI Indonesia. The stock trades about -0.29 of its potential returns per unit of risk. The DCI Indonesia Tbk is currently generating about 0.53 of returns per unit of risk over similar time horizon. If you would invest 4,650,000 in DCI Indonesia Tbk on December 2, 2024 and sell it today you would earn a total of 6,962,500 from holding DCI Indonesia Tbk or generate 149.73% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 95.45% |
Values | Daily Returns |
Bank Cimb Niaga vs. DCI Indonesia Tbk
Performance |
Timeline |
Bank Cimb Niaga |
DCI Indonesia Tbk |
Bank Cimb and DCI Indonesia Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Bank Cimb and DCI Indonesia
The main advantage of trading using opposite Bank Cimb and DCI Indonesia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank Cimb position performs unexpectedly, DCI Indonesia 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 DCI Indonesia will offset losses from the drop in DCI Indonesia's long position.Bank Cimb vs. Bank Danamon Indonesia | Bank Cimb vs. Bank Maybank Indonesia | Bank Cimb vs. Bank Pan Indonesia | Bank Cimb vs. Indosat Tbk |
DCI Indonesia vs. Bank Artos Indonesia | DCI Indonesia vs. Elang Mahkota Teknologi | DCI Indonesia vs. Indointernet Tbk PT | DCI Indonesia vs. PT Bukalapak |
Check out your portfolio center.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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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