Correlation Between Bank Negara and SHUAA Partners

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

Diversification Opportunities for Bank Negara and SHUAA Partners

-0.78

Correlation Coefficient

Bank Negara  SHUAA Partners

Pay attention - limited upside

The 3 months correlation between Bank and SHUAA is -0.78. Overlapping area represents the amount of risk that can be diversified away by holding Bank Negara Indonesia and SHUAA Partners Acquisition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SHUAA Partners Acqui 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 SHUAA Partners. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SHUAA Partners Acqui has no effect on the direction of Bank Negara i.e., Bank Negara and SHUAA Partners go up and down completely randomly.

Pair Corralation between Bank Negara and SHUAA Partners

If you would invest  1,077  in SHUAA Partners Acquisition on September 14, 2024 and sell it today you would earn a total of  0.00  from holding SHUAA Partners Acquisition or generate 0.0% return on investment over 90 days.

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

Bank Negara Indonesia  vs.  SHUAA Partners Acquisition

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 latest unsteady performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

SHUAA Partners Acqui

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Bank Negara and SHUAA Partners

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

The idea behind Bank Negara Indonesia and SHUAA Partners Acquisition 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.

Check out your portfolio center.

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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.