Correlation Between Merdeka Copper and Bank Qnb

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

By analyzing existing cross correlation between Merdeka Copper Gold and Bank Qnb Indonesia, you can compare the effects of market volatilities on Merdeka Copper and Bank Qnb 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 Merdeka Copper with a short position of Bank Qnb. Check out your portfolio center. Please also check ongoing floating volatility patterns of Merdeka Copper and Bank Qnb.

Diversification Opportunities for Merdeka Copper and Bank Qnb

0.38

Correlation Coefficient

Merdeka Copper  Bank Qnb

Weak diversification

The 3 months correlation between Merdeka and Bank is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Merdeka Copper Gold and Bank Qnb Indonesia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bank Qnb Indonesia and Merdeka Copper 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 Merdeka Copper Gold are associated (or correlated) with Bank Qnb. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bank Qnb Indonesia has no effect on the direction of Merdeka Copper i.e., Merdeka Copper and Bank Qnb go up and down completely randomly.

Pair Corralation between Merdeka Copper and Bank Qnb

Assuming the 90 days trading horizon Merdeka Copper Gold is expected to generate 1.92 times more return on investment than Bank Qnb. However, Merdeka Copper is 1.92 times more volatile than Bank Qnb Indonesia. It trades about -0.02 of its potential returns per unit of risk. Bank Qnb Indonesia is currently generating about -0.2 per unit of risk. If you would invest  161,500  in Merdeka Copper Gold on December 30, 2024 and sell it today you would lose (18,500) from holding Merdeka Copper Gold or give up 11.46% of portfolio value over 90 days.

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

Merdeka Copper Gold  vs.  Bank Qnb Indonesia

Merdeka Copper Gold

Risk-Adjusted Performance

Very Weak

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

Bank Qnb Indonesia

Risk-Adjusted Performance

Very Weak

Over the last 90 days Bank Qnb Indonesia 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 April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Merdeka Copper and Bank Qnb

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

The idea behind Merdeka Copper Gold and Bank Qnb Indonesia 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.