Correlation Between Air Canada and BAKRIE SUMATERA
Can any of the company-specific risk be diversified away by investing in both Air Canada and BAKRIE SUMATERA 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 Air Canada and BAKRIE SUMATERA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Air Canada and BAKRIE SUMATERA PL, you can compare the effects of market volatilities on Air Canada and BAKRIE SUMATERA 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 Air Canada with a short position of BAKRIE SUMATERA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Air Canada and BAKRIE SUMATERA.
Diversification Opportunities for Air Canada and BAKRIE SUMATERA
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Air and BAKRIE is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Air Canada and BAKRIE SUMATERA PL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BAKRIE SUMATERA PL and Air Canada 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 Air Canada are associated (or correlated) with BAKRIE SUMATERA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BAKRIE SUMATERA PL has no effect on the direction of Air Canada i.e., Air Canada and BAKRIE SUMATERA go up and down completely randomly.
Pair Corralation between Air Canada and BAKRIE SUMATERA
Assuming the 90 days trading horizon Air Canada is expected to generate 0.63 times more return on investment than BAKRIE SUMATERA. However, Air Canada is 1.59 times less risky than BAKRIE SUMATERA. It trades about 0.39 of its potential returns per unit of risk. BAKRIE SUMATERA PL is currently generating about 0.06 per unit of risk. If you would invest 1,238 in Air Canada on September 2, 2024 and sell it today you would earn a total of 437.00 from holding Air Canada or generate 35.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Air Canada vs. BAKRIE SUMATERA PL
Performance |
| Timeline |
| Air Canada |
| BAKRIE SUMATERA PL |
Air Canada and BAKRIE SUMATERA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Air Canada and BAKRIE SUMATERA
The main advantage of trading using opposite Air Canada and BAKRIE SUMATERA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Air Canada position performs unexpectedly, BAKRIE SUMATERA 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 BAKRIE SUMATERA will offset losses from the drop in BAKRIE SUMATERA's long position.| Air Canada vs. X FAB Silicon Foundries | Air Canada vs. SMA Solar Technology | Air Canada vs. Computer And Technologies | Air Canada vs. DXC Technology Co |
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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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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