Correlation Between Bank Negara and Ristia Bintang

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

Diversification Opportunities for Bank Negara and Ristia Bintang

-0.67

Correlation Coefficient

Bank Negara  Ristia Bintang

Excellent diversification

The 3 months correlation between Bank and Ristia is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Bank Negara Indonesia and Ristia Bintang Mahkotasejati in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ristia Bintang Mahko 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 Ristia Bintang. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ristia Bintang Mahko has no effect on the direction of Bank Negara i.e., Bank Negara and Ristia Bintang go up and down completely randomly.

Pair Corralation between Bank Negara and Ristia Bintang

Assuming the 90 days trading horizon Bank Negara Indonesia is expected to under-perform the Ristia Bintang. But the stock apears to be less risky and, when comparing its historical volatility, Bank Negara Indonesia is 1.56 times less risky than Ristia Bintang. The stock trades about -0.13 of its potential returns per unit of risk. The Ristia Bintang Mahkotasejati is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  3,000  in Ristia Bintang Mahkotasejati on September 16, 2024 and sell it today you would lose (100.00) from holding Ristia Bintang Mahkotasejati or give up 3.33% of portfolio value over 90 days.

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

Bank Negara Indonesia  vs.  Ristia Bintang Mahkotasejati

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. 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 January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Ristia Bintang Mahko

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ristia Bintang Mahkotasejati has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent forward-looking signals, Ristia Bintang is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Bank Negara and Ristia Bintang

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

The idea behind Bank Negara Indonesia and Ristia Bintang Mahkotasejati 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.