Correlation Between Bank Negara and SCHNITZER STEEL

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

Diversification Opportunities for Bank Negara and SCHNITZER STEEL

-0.58

Correlation Coefficient

Bank Negara  SCHNITZER STEEL

Excellent diversification

The 3 months correlation between Bank and SCHNITZER is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Bank Negara Indonesia and SCHNITZER STEEL INDUSTRIES in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SCHNITZER STEEL INDU 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 SCHNITZER STEEL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SCHNITZER STEEL INDU has no effect on the direction of Bank Negara i.e., Bank Negara and SCHNITZER STEEL go up and down completely randomly.

Pair Corralation between Bank Negara and SCHNITZER STEEL

If you would invest  3,277  in SCHNITZER STEEL INDUSTRIES on September 28, 2024 and sell it today you would earn a total of  0.00  from holding SCHNITZER STEEL INDUSTRIES or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	1.59%
Values	Daily Returns

Bank Negara Indonesia  vs.  SCHNITZER STEEL INDUSTRIES

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 unsteady 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.

SCHNITZER STEEL INDU

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SCHNITZER STEEL INDUSTRIES has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy technical indicators, SCHNITZER STEEL is not utilizing all of its potentials. The newest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Bank Negara and SCHNITZER STEEL

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

The idea behind Bank Negara Indonesia and SCHNITZER STEEL INDUSTRIES 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.