Correlation Between Merdeka Copper and Bank BRISyariah

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

Diversification Opportunities for Merdeka Copper and Bank BRISyariah

0.36

Correlation Coefficient

Merdeka Copper  Bank BRISyariah

Weak diversification

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

Pair Corralation between Merdeka Copper and Bank BRISyariah

Assuming the 90 days trading horizon Merdeka Copper Gold is expected to under-perform the Bank BRISyariah. But the stock apears to be less risky and, when comparing its historical volatility, Merdeka Copper Gold is 1.15 times less risky than Bank BRISyariah. The stock trades about -0.17 of its potential returns per unit of risk. The Bank BRISyariah Tbk is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  261,000  in Bank BRISyariah Tbk on September 2, 2024 and sell it today you would earn a total of  29,000  from holding Bank BRISyariah Tbk or generate 11.11% return on investment 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 BRISyariah Tbk

Merdeka Copper Gold

Risk-Adjusted Performance

0 of 100

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 conflicting performance in the last few months, the Stock's forward-looking signals remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Bank BRISyariah Tbk

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Bank BRISyariah Tbk are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Bank BRISyariah may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Merdeka Copper and Bank BRISyariah

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

The idea behind Merdeka Copper Gold and Bank BRISyariah Tbk 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.

Check out your portfolio center.

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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..