Correlation Between Bank Victoria and Asuransi Kresna

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

By analyzing existing cross correlation between Bank Victoria International and Asuransi Kresna Mitra, you can compare the effects of market volatilities on Bank Victoria and Asuransi Kresna 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 Victoria with a short position of Asuransi Kresna. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank Victoria and Asuransi Kresna.

Diversification Opportunities for Bank Victoria and Asuransi Kresna

0.66

Correlation Coefficient

Bank Victoria  Asuransi Kresna

Poor diversification

The 3 months correlation between Bank and Asuransi is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Bank Victoria International and Asuransi Kresna Mitra in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Asuransi Kresna Mitra and Bank Victoria 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 Victoria International are associated (or correlated) with Asuransi Kresna. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Asuransi Kresna Mitra has no effect on the direction of Bank Victoria i.e., Bank Victoria and Asuransi Kresna go up and down completely randomly.

Pair Corralation between Bank Victoria and Asuransi Kresna

Assuming the 90 days trading horizon Bank Victoria International is expected to generate 0.43 times more return on investment than Asuransi Kresna. However, Bank Victoria International is 2.35 times less risky than Asuransi Kresna. It trades about 0.0 of its potential returns per unit of risk. Asuransi Kresna Mitra is currently generating about -0.06 per unit of risk. If you would invest  9,500  in Bank Victoria International on September 28, 2024 and sell it today you would lose (600.00) from holding Bank Victoria International or give up 6.32% of portfolio value over 90 days.

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

Bank Victoria International  vs.  Asuransi Kresna Mitra

Bank Victoria Intern

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Bank Victoria International are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Bank Victoria may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Asuransi Kresna Mitra

Risk-Adjusted Performance

4 of 100

Insignificant

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

Pair Trading with Bank Victoria and Asuransi Kresna

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

The idea behind Bank Victoria International and Asuransi Kresna Mitra 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.