Correlation Between Argha Karya and Bank Central
Can any of the company-specific risk be diversified away by investing in both Argha Karya and Bank Central 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 Argha Karya and Bank Central into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Argha Karya Prima and Bank Central Asia, you can compare the effects of market volatilities on Argha Karya and Bank Central 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 Argha Karya with a short position of Bank Central. Check out your portfolio center. Please also check ongoing floating volatility patterns of Argha Karya and Bank Central.
Diversification Opportunities for Argha Karya and Bank Central
-0.47 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Argha and Bank is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Argha Karya Prima and Bank Central Asia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bank Central Asia and Argha Karya 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 Argha Karya Prima are associated (or correlated) with Bank Central. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bank Central Asia has no effect on the direction of Argha Karya i.e., Argha Karya and Bank Central go up and down completely randomly.
Pair Corralation between Argha Karya and Bank Central
Assuming the 90 days trading horizon Argha Karya Prima is expected to under-perform the Bank Central. In addition to that, Argha Karya is 1.32 times more volatile than Bank Central Asia. It trades about -0.2 of its total potential returns per unit of risk. Bank Central Asia is currently generating about -0.03 per unit of volatility. If you would invest 1,007,500 in Bank Central Asia on January 25, 2024 and sell it today you would lose (12,500) from holding Bank Central Asia or give up 1.24% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Argha Karya Prima vs. Bank Central Asia
Performance |
| Timeline |
| Argha Karya Prima |
| Bank Central Asia |
Argha Karya and Bank Central Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Argha Karya and Bank Central
The main advantage of trading using opposite Argha Karya and Bank Central positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Argha Karya position performs unexpectedly, Bank Central 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 Central will offset losses from the drop in Bank Central's long position.The idea behind Argha Karya Prima and Bank Central Asia 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.| Bank Central vs. Astra International Tbk | Bank Central vs. United Tractors Tbk | Bank Central vs. Bukit Asam Tbk | Bank Central vs. Indofood Sukses Makmur |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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