Correlation Between Bank Negara and Blueriver Acquisition

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

Diversification Opportunities for Bank Negara and Blueriver Acquisition

0.81

Correlation Coefficient

Bank Negara  Blueriver Acquisition

Very poor diversification

The 3 months correlation between Bank and Blueriver is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Bank Negara Indonesia and Blueriver Acquisition Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Blueriver Acquisition 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 Blueriver Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Blueriver Acquisition has no effect on the direction of Bank Negara i.e., Bank Negara and Blueriver Acquisition go up and down completely randomly.

Pair Corralation between Bank Negara and Blueriver Acquisition

Assuming the 90 days horizon Bank Negara Indonesia is expected to under-perform the Blueriver Acquisition. In addition to that, Bank Negara is 21.47 times more volatile than Blueriver Acquisition Corp. It trades about -0.07 of its total potential returns per unit of risk. Blueriver Acquisition Corp is currently generating about -0.41 per unit of volatility. If you would invest  1,061  in Blueriver Acquisition Corp on September 18, 2024 and sell it today you would lose (6.00) from holding Blueriver Acquisition Corp or give up 0.57% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	9.52%
Values	Daily Returns

Bank Negara Indonesia  vs.  Blueriver Acquisition Corp

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. In spite of weak performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Blueriver Acquisition

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Blueriver Acquisition Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Blueriver Acquisition is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Bank Negara and Blueriver Acquisition

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

The idea behind Bank Negara Indonesia and Blueriver Acquisition Corp 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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.