Correlation Between Victoria Insurance and Bank Pembangunan

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

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

Diversification Opportunities for Victoria Insurance and Bank Pembangunan

0.35

Correlation Coefficient

Victoria Insurance  Bank Pembangunan

Weak diversification

The 3 months correlation between Victoria and Bank is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Victoria Insurance Tbk and Bank Pembangunan Daerah in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bank Pembangunan Daerah and Victoria Insurance 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 Victoria Insurance Tbk are associated (or correlated) with Bank Pembangunan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bank Pembangunan Daerah has no effect on the direction of Victoria Insurance i.e., Victoria Insurance and Bank Pembangunan go up and down completely randomly.

Pair Corralation between Victoria Insurance and Bank Pembangunan

Assuming the 90 days trading horizon Victoria Insurance Tbk is expected to generate 0.94 times more return on investment than Bank Pembangunan. However, Victoria Insurance Tbk is 1.06 times less risky than Bank Pembangunan. It trades about 0.02 of its potential returns per unit of risk. Bank Pembangunan Daerah is currently generating about -0.04 per unit of risk. If you would invest  11,300  in Victoria Insurance Tbk on April 25, 2025 and sell it today you would earn a total of  0.00  from holding Victoria Insurance Tbk or generate 0.0% return on investment over 90 days.

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

Victoria Insurance Tbk  vs.  Bank Pembangunan Daerah

Victoria Insurance Tbk

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Victoria Insurance Tbk are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent forward-looking signals, Victoria Insurance is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Bank Pembangunan Daerah

Risk-Adjusted Performance

Very Weak

Over the last 90 days Bank Pembangunan Daerah has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's forward-looking signals remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Pair Trading with Victoria Insurance and Bank Pembangunan

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

The idea behind Victoria Insurance Tbk and Bank Pembangunan Daerah 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.