Correlation Between Bank Central and Bisi International

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

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

Diversification Opportunities for Bank Central and Bisi International

0.57

Correlation Coefficient

Bank Central  Bisi International

Very weak diversification

The 3 months correlation between Bank and Bisi is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Bank Central Asia and Bisi International Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bisi International Tbk and Bank Central 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 Central Asia are associated (or correlated) with Bisi International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bisi International Tbk has no effect on the direction of Bank Central i.e., Bank Central and Bisi International go up and down completely randomly.

Pair Corralation between Bank Central and Bisi International

Assuming the 90 days trading horizon Bank Central Asia is expected to generate 0.68 times more return on investment than Bisi International. However, Bank Central Asia is 1.48 times less risky than Bisi International. It trades about 0.1 of its potential returns per unit of risk. Bisi International Tbk is currently generating about -0.26 per unit of risk. If you would invest  947,500  in Bank Central Asia on February 7, 2024 and sell it today you would earn a total of  25,000  from holding Bank Central Asia or generate 2.64% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	93.33%
Values	Daily Returns

Bank Central Asia  vs.  Bisi International Tbk

Bank Central Asia

Risk-Adjusted Performance

2 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Bank Central Asia are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent basic indicators, Bank Central is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Bisi International Tbk

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Bisi International Tbk are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting basic indicators, Bisi International disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Bank Central and Bisi International

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

The idea behind Bank Central Asia and Bisi International 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.

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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.