Correlation Between Bank Negara and MEDS Old

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

Diversification Opportunities for Bank Negara and MEDS Old

0.0

Correlation Coefficient

Bank Negara  MEDS Old

Pay attention - limited upside

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

Pair Corralation between Bank Negara and MEDS Old

If you would invest  1,301  in Bank Negara Indonesia on October 24, 2024 and sell it today you would earn a total of  189.00  from holding Bank Negara Indonesia or generate 14.53% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	5.26%
Values	Daily Returns

Bank Negara Indonesia  vs.  MEDS Old

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 latest unsteady performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

MEDS Old

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days MEDS Old has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable fundamental indicators, MEDS Old is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Bank Negara and MEDS Old

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

The idea behind Bank Negara Indonesia and MEDS Old 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.