Correlation Between Bank BRISyariah and M Cash

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

Diversification Opportunities for Bank BRISyariah and M Cash

0.35

Correlation Coefficient

Bank BRISyariah  M Cash

Weak diversification

The 3 months correlation between Bank and MCAS is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Bank BRISyariah Tbk and M Cash Integrasi in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on M Cash Integrasi 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 M Cash. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of M Cash Integrasi has no effect on the direction of Bank BRISyariah i.e., Bank BRISyariah and M Cash go up and down completely randomly.

Pair Corralation between Bank BRISyariah and M Cash

Assuming the 90 days trading horizon Bank BRISyariah Tbk is expected to under-perform the M Cash. But the stock apears to be less risky and, when comparing its historical volatility, Bank BRISyariah Tbk is 1.49 times less risky than M Cash. The stock trades about -0.08 of its potential returns per unit of risk. The M Cash Integrasi is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  110,000  in M Cash Integrasi on December 1, 2024 and sell it today you would earn a total of  9,500  from holding M Cash Integrasi or generate 8.64% return on investment over 90 days.

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

Bank BRISyariah Tbk  vs.  M Cash Integrasi

Bank BRISyariah Tbk

Risk-Adjusted Performance

Very Weak

Over the last 90 days Bank BRISyariah Tbk 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.

M Cash Integrasi

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in M Cash Integrasi are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, M Cash disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Bank BRISyariah and M Cash

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

The idea behind Bank BRISyariah Tbk and M Cash Integrasi 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.