Correlation Between Bank Negara and Konica Minolta

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

Diversification Opportunities for Bank Negara and Konica Minolta

0.23

Correlation Coefficient

Bank Negara  Konica Minolta

Modest diversification

The 3 months correlation between Bank and Konica is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Bank Negara Indonesia and Konica Minolta in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Konica Minolta 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 Konica Minolta. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Konica Minolta has no effect on the direction of Bank Negara i.e., Bank Negara and Konica Minolta go up and down completely randomly.

Pair Corralation between Bank Negara and Konica Minolta

Assuming the 90 days horizon Bank Negara Indonesia is expected to generate 34.19 times more return on investment than Konica Minolta. However, Bank Negara is 34.19 times more volatile than Konica Minolta. It trades about 0.0 of its potential returns per unit of risk. Konica Minolta is currently generating about -0.15 per unit of risk. If you would invest  1,301  in Bank Negara Indonesia on December 22, 2024 and sell it today you would lose (120.00) from holding Bank Negara Indonesia or give up 9.22% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.36%
Values	Daily Returns

Bank Negara Indonesia  vs.  Konica Minolta

Bank Negara Indonesia

Risk-Adjusted Performance

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 fairly strong basic indicators, Bank Negara is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Konica Minolta

Risk-Adjusted Performance

Very Weak

Over the last 90 days Konica Minolta has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Konica Minolta is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Bank Negara and Konica Minolta

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

The idea behind Bank Negara Indonesia and Konica Minolta 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .