Correlation Between Kawasan Industri and Bank Danamon
Can any of the company-specific risk be diversified away by investing in both Kawasan Industri and Bank Danamon 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 Kawasan Industri and Bank Danamon into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kawasan Industri Jababeka and Bank Danamon Indonesia, you can compare the effects of market volatilities on Kawasan Industri and Bank Danamon 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 Kawasan Industri with a short position of Bank Danamon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kawasan Industri and Bank Danamon.
Diversification Opportunities for Kawasan Industri and Bank Danamon
-0.45 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Kawasan and Bank is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Kawasan Industri Jababeka and Bank Danamon Indonesia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bank Danamon Indonesia and Kawasan Industri 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 Kawasan Industri Jababeka are associated (or correlated) with Bank Danamon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bank Danamon Indonesia has no effect on the direction of Kawasan Industri i.e., Kawasan Industri and Bank Danamon go up and down completely randomly.
Pair Corralation between Kawasan Industri and Bank Danamon
Assuming the 90 days trading horizon Kawasan Industri Jababeka is expected to generate 1.7 times more return on investment than Bank Danamon. However, Kawasan Industri is 1.7 times more volatile than Bank Danamon Indonesia. It trades about 0.04 of its potential returns per unit of risk. Bank Danamon Indonesia is currently generating about 0.01 per unit of risk. If you would invest 14,600 in Kawasan Industri Jababeka on September 10, 2024 and sell it today you would earn a total of 5,600 from holding Kawasan Industri Jababeka or generate 38.36% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 99.79% |
Values | Daily Returns |
Kawasan Industri Jababeka vs. Bank Danamon Indonesia
Performance |
Timeline |
Kawasan Industri Jababeka |
Bank Danamon Indonesia |
Kawasan Industri and Bank Danamon Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Kawasan Industri and Bank Danamon
The main advantage of trading using opposite Kawasan Industri and Bank Danamon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kawasan Industri position performs unexpectedly, Bank Danamon 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 Bank Danamon will offset losses from the drop in Bank Danamon's long position.Kawasan Industri vs. Bakrieland Development Tbk | Kawasan Industri vs. Ciputra Development Tbk | Kawasan Industri vs. Sentul City Tbk | Kawasan Industri vs. Solusi Bangun Indonesia |
Bank Danamon vs. Bank Windu Kentjana | Bank Danamon vs. Bank Mnc Internasional | Bank Danamon vs. Bank Pan Indonesia | Bank Danamon vs. Bank Pembangunan Daerah |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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