Correlation Between BANK CIMB and ECHO INVESTMENT

Can any of the company-specific risk be diversified away by investing in both BANK CIMB and ECHO INVESTMENT 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 CIMB and ECHO INVESTMENT into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between BANK CIMB NIAGA and ECHO INVESTMENT ZY, you can compare the effects of market volatilities on BANK CIMB and ECHO INVESTMENT 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 CIMB with a short position of ECHO INVESTMENT. Check out your portfolio center. Please also check ongoing floating volatility patterns of BANK CIMB and ECHO INVESTMENT.

Diversification Opportunities for BANK CIMB and ECHO INVESTMENT

0.0

Correlation Coefficient

BANK CIMB  ECHO INVESTMENT

Pay attention - limited upside

The 3 months correlation between BANK and ECHO is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding BANK CIMB NIAGA and ECHO INVESTMENT ZY in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ECHO INVESTMENT ZY and BANK CIMB 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 CIMB NIAGA are associated (or correlated) with ECHO INVESTMENT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ECHO INVESTMENT ZY has no effect on the direction of BANK CIMB i.e., BANK CIMB and ECHO INVESTMENT go up and down completely randomly.

Pair Corralation between BANK CIMB and ECHO INVESTMENT

If you would invest (100.00) in BANK CIMB NIAGA on December 19, 2024 and sell it today you would earn a total of  100.00  from holding BANK CIMB NIAGA or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

BANK CIMB NIAGA  vs.  ECHO INVESTMENT ZY

BANK CIMB NIAGA

Risk-Adjusted Performance

Very Weak

Over the last 90 days BANK CIMB NIAGA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, BANK CIMB is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

ECHO INVESTMENT ZY

Risk-Adjusted Performance

Very Weak

Over the last 90 days ECHO INVESTMENT ZY has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with BANK CIMB and ECHO INVESTMENT

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

The idea behind BANK CIMB NIAGA and ECHO INVESTMENT ZY 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.