Correlation Between PT Homeco and Bank Central

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

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

Diversification Opportunities for PT Homeco and Bank Central

-0.36

Correlation Coefficient

PT Homeco  Bank Central

Very good diversification

The 3 months correlation between LIVE and Bank is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding PT Homeco Victoria and Bank Central Asia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bank Central Asia and PT Homeco 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 PT Homeco Victoria are associated (or correlated) with Bank Central. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bank Central Asia has no effect on the direction of PT Homeco i.e., PT Homeco and Bank Central go up and down completely randomly.

Pair Corralation between PT Homeco and Bank Central

Assuming the 90 days trading horizon PT Homeco Victoria is expected to generate 1.89 times more return on investment than Bank Central. However, PT Homeco is 1.89 times more volatile than Bank Central Asia. It trades about 0.04 of its potential returns per unit of risk. Bank Central Asia is currently generating about -0.12 per unit of risk. If you would invest  19,700  in PT Homeco Victoria on November 29, 2024 and sell it today you would earn a total of  900.00  from holding PT Homeco Victoria or generate 4.57% return on investment over 90 days.

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

PT Homeco Victoria  vs.  Bank Central Asia

PT Homeco Victoria

Risk-Adjusted Performance

Insignificant

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

Bank Central Asia

Risk-Adjusted Performance

Very Weak

Over the last 90 days Bank Central Asia has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's forward-looking signals remain quite persistent which may send shares a bit higher in March 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with PT Homeco and Bank Central

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

The idea behind PT Homeco Victoria and Bank Central Asia 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.