Correlation Between Bank Victoria and Bank Artha

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

Diversification Opportunities for Bank Victoria and Bank Artha

0.59

Correlation Coefficient

Bank Victoria  Bank Artha

Very weak diversification

The 3 months correlation between Bank and Bank is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Bank Victoria International and Bank Artha Graha in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bank Artha Graha 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 Bank Artha. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bank Artha Graha has no effect on the direction of Bank Victoria i.e., Bank Victoria and Bank Artha go up and down completely randomly.

Pair Corralation between Bank Victoria and Bank Artha

Assuming the 90 days trading horizon Bank Victoria is expected to generate 13.53 times less return on investment than Bank Artha. But when comparing it to its historical volatility, Bank Victoria International is 3.11 times less risky than Bank Artha. It trades about 0.08 of its potential returns per unit of risk. Bank Artha Graha is currently generating about 0.33 of returns per unit of risk over similar time horizon. If you would invest  7,100  in Bank Artha Graha on September 3, 2024 and sell it today you would earn a total of  36,300  from holding Bank Artha Graha or generate 511.27% return on investment over 90 days.

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

Bank Victoria International  vs.  Bank Artha Graha

Bank Victoria Intern

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Bank Victoria International are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Bank Victoria disclosed solid returns over the last few months and may actually be approaching a breakup point.

Bank Artha Graha

Risk-Adjusted Performance

26 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Bank Artha Graha are ranked lower than 26 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Bank Artha disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Bank Victoria and Bank Artha

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

The idea behind Bank Victoria International and Bank Artha Graha 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.