Correlation Between Spire Global and Bank Mega

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

By analyzing existing cross correlation between Spire Global and Bank Mega Tbk, you can compare the effects of market volatilities on Spire Global and Bank Mega 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 Spire Global with a short position of Bank Mega. Check out your portfolio center. Please also check ongoing floating volatility patterns of Spire Global and Bank Mega.

Diversification Opportunities for Spire Global and Bank Mega

0.37

Correlation Coefficient

Spire Global  Bank Mega

Weak diversification

The 3 months correlation between Spire and Bank is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Spire Global and Bank Mega Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bank Mega Tbk and Spire Global 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 Spire Global are associated (or correlated) with Bank Mega. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bank Mega Tbk has no effect on the direction of Spire Global i.e., Spire Global and Bank Mega go up and down completely randomly.

Pair Corralation between Spire Global and Bank Mega

Given the investment horizon of 90 days Spire Global is expected to under-perform the Bank Mega. In addition to that, Spire Global is 4.52 times more volatile than Bank Mega Tbk. It trades about -0.05 of its total potential returns per unit of risk. Bank Mega Tbk is currently generating about -0.12 per unit of volatility. If you would invest  413,000  in Bank Mega Tbk on December 28, 2024 and sell it today you would lose (57,000) from holding Bank Mega Tbk or give up 13.8% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	96.72%
Values	Daily Returns

Spire Global  vs.  Bank Mega Tbk

Spire Global

Risk-Adjusted Performance

Very Weak

Over the last 90 days Spire Global has generated negative risk-adjusted returns adding no value to investors with long positions. Even with unfluctuating performance in the last few months, the Stock's forward indicators remain relatively invariable which may send shares a bit higher in April 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Bank Mega Tbk

Risk-Adjusted Performance

Very Weak

Over the last 90 days Bank Mega Tbk has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's forward-looking signals remain quite persistent which may send shares a bit higher in April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Spire Global and Bank Mega

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

The idea behind Spire Global and Bank Mega Tbk 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 Global Correlations module to find global opportunities by holding instruments from different markets.