Correlation Between Bank Mayapada and Asuransi Jiwa

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

Diversification Opportunities for Bank Mayapada and Asuransi Jiwa

0.61

Correlation Coefficient

Bank Mayapada  Asuransi Jiwa

Poor diversification

The 3 months correlation between Bank and Asuransi is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Bank Mayapada Internasional and Asuransi Jiwa Sinarmas in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Asuransi Jiwa Sinarmas 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 Jiwa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Asuransi Jiwa Sinarmas has no effect on the direction of Bank Mayapada i.e., Bank Mayapada and Asuransi Jiwa go up and down completely randomly.

Pair Corralation between Bank Mayapada and Asuransi Jiwa

Assuming the 90 days trading horizon Bank Mayapada Internasional is expected to under-perform the Asuransi Jiwa. But the stock apears to be less risky and, when comparing its historical volatility, Bank Mayapada Internasional is 2.29 times less risky than Asuransi Jiwa. The stock trades about -0.08 of its potential returns per unit of risk. The Asuransi Jiwa Sinarmas is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  725,000  in Asuransi Jiwa Sinarmas on December 30, 2024 and sell it today you would lose (40,000) from holding Asuransi Jiwa Sinarmas or give up 5.52% of portfolio value over 90 days.

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

Bank Mayapada Internasional  vs.  Asuransi Jiwa Sinarmas

Bank Mayapada Intern

Risk-Adjusted Performance

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 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.

Asuransi Jiwa Sinarmas

Risk-Adjusted Performance

Very Weak

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

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

The idea behind Bank Mayapada Internasional and Asuransi Jiwa Sinarmas 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.