Correlation Between Bank Amar and Bhakti Multi

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

By analyzing existing cross correlation between Bank Amar Indonesia and Bhakti Multi Artha, you can compare the effects of market volatilities on Bank Amar and Bhakti Multi 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 Amar with a short position of Bhakti Multi. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank Amar and Bhakti Multi.

Diversification Opportunities for Bank Amar and Bhakti Multi

0.02

Correlation Coefficient

Bank Amar  Bhakti Multi

Significant diversification

The 3 months correlation between Bank and Bhakti is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Bank Amar Indonesia and Bhakti Multi Artha in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bhakti Multi Artha and Bank Amar 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 Amar Indonesia are associated (or correlated) with Bhakti Multi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bhakti Multi Artha has no effect on the direction of Bank Amar i.e., Bank Amar and Bhakti Multi go up and down completely randomly.

Pair Corralation between Bank Amar and Bhakti Multi

Assuming the 90 days trading horizon Bank Amar is expected to generate 1.16 times less return on investment than Bhakti Multi. In addition to that, Bank Amar is 2.54 times more volatile than Bhakti Multi Artha. It trades about 0.14 of its total potential returns per unit of risk. Bhakti Multi Artha is currently generating about 0.43 per unit of volatility. If you would invest  49,800  in Bhakti Multi Artha on April 25, 2025 and sell it today you would earn a total of  26,700  from holding Bhakti Multi Artha or generate 53.61% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Bank Amar Indonesia  vs.  Bhakti Multi Artha

Bank Amar Indonesia

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Bank Amar Indonesia are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Bank Amar disclosed solid returns over the last few months and may actually be approaching a breakup point.

Bhakti Multi Artha

Risk-Adjusted Performance

Very Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Bhakti Multi Artha are ranked lower than 33 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Bhakti Multi disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Bank Amar and Bhakti Multi

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

The idea behind Bank Amar Indonesia and Bhakti Multi Artha 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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.