Correlation Between Bank Negara and Worldline

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

Diversification Opportunities for Bank Negara and Worldline

-0.76

Correlation Coefficient

Bank Negara  Worldline

Pay attention - limited upside

The 3 months correlation between Bank and Worldline is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding Bank Negara Indonesia and Worldline SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Worldline SA 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 Worldline. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Worldline SA has no effect on the direction of Bank Negara i.e., Bank Negara and Worldline go up and down completely randomly.

Pair Corralation between Bank Negara and Worldline

Assuming the 90 days horizon Bank Negara is expected to generate 10.35 times less return on investment than Worldline. In addition to that, Bank Negara is 1.59 times more volatile than Worldline SA. It trades about 0.01 of its total potential returns per unit of risk. Worldline SA is currently generating about 0.22 per unit of volatility. If you would invest  800.00  in Worldline SA on October 6, 2024 and sell it today you would earn a total of  100.00  from holding Worldline SA or generate 12.5% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	95.24%
Values	Daily Returns

Bank Negara Indonesia  vs.  Worldline SA

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.

Worldline SA

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Worldline SA are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Worldline reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Bank Negara and Worldline

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

The idea behind Bank Negara Indonesia and Worldline SA 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.