Correlation Between BNK Banking and Aneka Tambang

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

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

Diversification Opportunities for BNK Banking and Aneka Tambang

0.46

Correlation Coefficient

BNK Banking  Aneka Tambang

Very weak diversification

The 3 months correlation between BNK and Aneka is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding BNK Banking and Aneka Tambang Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aneka Tambang Tbk and BNK Banking 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 BNK Banking are associated (or correlated) with Aneka Tambang. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aneka Tambang Tbk has no effect on the direction of BNK Banking i.e., BNK Banking and Aneka Tambang go up and down completely randomly.

Pair Corralation between BNK Banking and Aneka Tambang

Assuming the 90 days trading horizon BNK Banking is expected to generate 1.26 times more return on investment than Aneka Tambang. However, BNK Banking is 1.26 times more volatile than Aneka Tambang Tbk. It trades about -0.02 of its potential returns per unit of risk. Aneka Tambang Tbk is currently generating about -0.05 per unit of risk. If you would invest  35.00  in BNK Banking on September 22, 2024 and sell it today you would lose (2.00) from holding BNK Banking or give up 5.71% of portfolio value over 90 days.

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

BNK Banking  vs.  Aneka Tambang Tbk

BNK Banking

Risk-Adjusted Performance

0 of 100

Very Weak

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

Aneka Tambang Tbk

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aneka Tambang Tbk has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's primary indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with BNK Banking and Aneka Tambang

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

The idea behind BNK Banking and Aneka Tambang 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.