Correlation Between Bank Negara and Creek Road

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

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

Diversification Opportunities for Bank Negara and Creek Road

-0.73

Correlation Coefficient

Bank Negara  Creek Road

Pay attention - limited upside

The 3 months correlation between Bank and Creek is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding Bank Negara Indonesia and Creek Road Miners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Creek Road Miners and Bank Negara 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 Negara Indonesia are associated (or correlated) with Creek Road. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Creek Road Miners has no effect on the direction of Bank Negara i.e., Bank Negara and Creek Road go up and down completely randomly.

Pair Corralation between Bank Negara and Creek Road

Assuming the 90 days horizon Bank Negara is expected to generate 14.31 times less return on investment than Creek Road. But when comparing it to its historical volatility, Bank Negara Indonesia is 3.14 times less risky than Creek Road. It trades about 0.03 of its potential returns per unit of risk. Creek Road Miners is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  8.90  in Creek Road Miners on September 26, 2024 and sell it today you would earn a total of  14.10  from holding Creek Road Miners or generate 158.43% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	27.82%
Values	Daily Returns

Bank Negara Indonesia  vs.  Creek Road Miners

Bank Negara Indonesia

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bank Negara Indonesia has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Creek Road Miners

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Creek Road Miners has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable forward-looking signals, Creek Road is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Bank Negara and Creek Road

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

The idea behind Bank Negara Indonesia and Creek Road Miners 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.