Correlation Between Bank BRISyariah and Aneka Tambang

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

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

Diversification Opportunities for Bank BRISyariah and Aneka Tambang

0.47

Correlation Coefficient

Bank BRISyariah  Aneka Tambang

Very weak diversification

The 3 months correlation between Bank and Aneka is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Bank BRISyariah Tbk and Aneka Tambang Persero in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aneka Tambang Persero and Bank BRISyariah 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 BRISyariah Tbk are associated (or correlated) with Aneka Tambang. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aneka Tambang Persero has no effect on the direction of Bank BRISyariah i.e., Bank BRISyariah and Aneka Tambang go up and down completely randomly.

Pair Corralation between Bank BRISyariah and Aneka Tambang

Assuming the 90 days trading horizon Bank BRISyariah Tbk is expected to generate 1.11 times more return on investment than Aneka Tambang. However, Bank BRISyariah is 1.11 times more volatile than Aneka Tambang Persero. It trades about 0.08 of its potential returns per unit of risk. Aneka Tambang Persero is currently generating about 0.03 per unit of risk. If you would invest  261,000  in Bank BRISyariah Tbk on September 2, 2024 and sell it today you would earn a total of  29,000  from holding Bank BRISyariah Tbk or generate 11.11% return on investment over 90 days.

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

Bank BRISyariah Tbk  vs.  Aneka Tambang Persero

Bank BRISyariah Tbk

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Bank BRISyariah Tbk are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Bank BRISyariah may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Aneka Tambang Persero

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Aneka Tambang Persero are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent forward-looking signals, Aneka Tambang 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 BRISyariah and Aneka Tambang

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

The idea behind Bank BRISyariah Tbk and Aneka Tambang Persero 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.