Correlation Between Bank Rakyat and Martina Berto

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

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

Diversification Opportunities for Bank Rakyat and Martina Berto

0.76

Correlation Coefficient

Bank Rakyat  Martina Berto

Poor diversification

The 3 months correlation between Bank and Martina is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Bank Rakyat Indonesia and Martina Berto Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Martina Berto Tbk and Bank Rakyat 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 Rakyat Indonesia are associated (or correlated) with Martina Berto. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Martina Berto Tbk has no effect on the direction of Bank Rakyat i.e., Bank Rakyat and Martina Berto go up and down completely randomly.

Pair Corralation between Bank Rakyat and Martina Berto

Assuming the 90 days trading horizon Bank Rakyat Indonesia is expected to under-perform the Martina Berto. But the stock apears to be less risky and, when comparing its historical volatility, Bank Rakyat Indonesia is 2.16 times less risky than Martina Berto. The stock trades about -0.04 of its potential returns per unit of risk. The Martina Berto Tbk is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  10,500  in Martina Berto Tbk on September 15, 2024 and sell it today you would lose (1,500) from holding Martina Berto Tbk or give up 14.29% of portfolio value over 90 days.

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

Bank Rakyat Indonesia  vs.  Martina Berto Tbk

Bank Rakyat Indonesia

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bank Rakyat 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.

Martina Berto Tbk

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Martina Berto Tbk has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's forward-looking signals remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Pair Trading with Bank Rakyat and Martina Berto

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

The idea behind Bank Rakyat Indonesia and Martina Berto 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.