Correlation Between Bank Mayapada and Asuransi Dayin

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

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

Diversification Opportunities for Bank Mayapada and Asuransi Dayin

0.2

Correlation Coefficient

Bank Mayapada  Asuransi Dayin

Modest diversification

The 3 months correlation between Bank and Asuransi is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Bank Mayapada Internasional and Asuransi Dayin Mitra in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Asuransi Dayin Mitra and Bank Mayapada 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 Mayapada Internasional are associated (or correlated) with Asuransi Dayin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Asuransi Dayin Mitra has no effect on the direction of Bank Mayapada i.e., Bank Mayapada and Asuransi Dayin go up and down completely randomly.

Pair Corralation between Bank Mayapada and Asuransi Dayin

Assuming the 90 days trading horizon Bank Mayapada Internasional is expected to under-perform the Asuransi Dayin. But the stock apears to be less risky and, when comparing its historical volatility, Bank Mayapada Internasional is 9.64 times less risky than Asuransi Dayin. The stock trades about -0.01 of its potential returns per unit of risk. The Asuransi Dayin Mitra is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  40,039  in Asuransi Dayin Mitra on October 11, 2024 and sell it today you would earn a total of  7,361  from holding Asuransi Dayin Mitra or generate 18.38% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	99.79%
Values	Daily Returns

Bank Mayapada Internasional  vs.  Asuransi Dayin Mitra

Bank Mayapada Intern

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bank Mayapada Internasional has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent forward-looking signals, Bank Mayapada is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Asuransi Dayin Mitra

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Asuransi Dayin Mitra has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent forward-looking signals, Asuransi Dayin 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 Mayapada and Asuransi Dayin

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

The idea behind Bank Mayapada Internasional and Asuransi Dayin 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.