Correlation Between Arita Prima and Bayu Buana
Can any of the company-specific risk be diversified away by investing in both Arita Prima and Bayu Buana 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 Arita Prima and Bayu Buana into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Arita Prima Indonesia and Bayu Buana Tbk, you can compare the effects of market volatilities on Arita Prima and Bayu Buana 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 Arita Prima with a short position of Bayu Buana. Check out your portfolio center. Please also check ongoing floating volatility patterns of Arita Prima and Bayu Buana.
Diversification Opportunities for Arita Prima and Bayu Buana
0.23 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Arita and Bayu is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Arita Prima Indonesia and Bayu Buana Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bayu Buana Tbk and Arita Prima 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 Arita Prima Indonesia are associated (or correlated) with Bayu Buana. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bayu Buana Tbk has no effect on the direction of Arita Prima i.e., Arita Prima and Bayu Buana go up and down completely randomly.
Pair Corralation between Arita Prima and Bayu Buana
Assuming the 90 days trading horizon Arita Prima Indonesia is expected to under-perform the Bayu Buana. But the stock apears to be less risky and, when comparing its historical volatility, Arita Prima Indonesia is 1.47 times less risky than Bayu Buana. The stock trades about -0.01 of its potential returns per unit of risk. The Bayu Buana Tbk is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 89,962 in Bayu Buana Tbk on August 27, 2024 and sell it today you would earn a total of 48,038 from holding Bayu Buana Tbk or generate 53.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.79% |
| Values | Daily Returns |
Arita Prima Indonesia vs. Bayu Buana Tbk
Performance |
| Timeline |
| Arita Prima Indonesia |
| Bayu Buana Tbk |
Arita Prima and Bayu Buana Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Arita Prima and Bayu Buana
The main advantage of trading using opposite Arita Prima and Bayu Buana positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Arita Prima position performs unexpectedly, Bayu Buana 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 Bayu Buana will offset losses from the drop in Bayu Buana's long position.| Arita Prima vs. Bintang Mitra Semestaraya | Arita Prima vs. Alkindo Naratama Tbk | Arita Prima vs. Bayu Buana Tbk | Arita Prima vs. Austindo Nusantara Jaya |
| Bayu Buana vs. Akbar Indomakmur Stimec | Bayu Buana vs. Mahaka Media Tbk | Bayu Buana vs. Fortune Indonesia Tbk | Bayu Buana vs. Gema Grahasarana Tbk |
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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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