Correlation Between Bank Agris and Bank Ganesha

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

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

Diversification Opportunities for Bank Agris and Bank Ganesha

0.62

Correlation Coefficient

Bank Agris  Bank Ganesha

Poor diversification

The 3 months correlation between Bank and Bank is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Bank Agris Tbk and Bank Ganesha Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bank Ganesha Tbk and Bank Agris 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 Agris Tbk are associated (or correlated) with Bank Ganesha. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bank Ganesha Tbk has no effect on the direction of Bank Agris i.e., Bank Agris and Bank Ganesha go up and down completely randomly.

Pair Corralation between Bank Agris and Bank Ganesha

Assuming the 90 days trading horizon Bank Agris is expected to generate 1.87 times less return on investment than Bank Ganesha. In addition to that, Bank Agris is 1.44 times more volatile than Bank Ganesha Tbk. It trades about 0.04 of its total potential returns per unit of risk. Bank Ganesha Tbk is currently generating about 0.11 per unit of volatility. If you would invest  6,500  in Bank Ganesha Tbk on September 15, 2024 and sell it today you would earn a total of  1,700  from holding Bank Ganesha Tbk or generate 26.15% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Bank Agris Tbk  vs.  Bank Ganesha Tbk

Bank Agris Tbk

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Bank Agris Tbk are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Bank Agris disclosed solid returns over the last few months and may actually be approaching a breakup point.

Bank Ganesha Tbk

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Bank Ganesha Tbk are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Bank Ganesha disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Bank Agris and Bank Ganesha

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

The idea behind Bank Agris Tbk and Bank Ganesha 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.