Correlation Between Adi Sarana and Bayan Resources
Can any of the company-specific risk be diversified away by investing in both Adi Sarana and Bayan Resources 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 Adi Sarana and Bayan Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Adi Sarana Armada and Bayan Resources Tbk, you can compare the effects of market volatilities on Adi Sarana and Bayan Resources 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 Adi Sarana with a short position of Bayan Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Adi Sarana and Bayan Resources.
Diversification Opportunities for Adi Sarana and Bayan Resources
-0.22 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Adi and Bayan is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Adi Sarana Armada and Bayan Resources Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bayan Resources Tbk and Adi Sarana 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 Adi Sarana Armada are associated (or correlated) with Bayan Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bayan Resources Tbk has no effect on the direction of Adi Sarana i.e., Adi Sarana and Bayan Resources go up and down completely randomly.
Pair Corralation between Adi Sarana and Bayan Resources
Assuming the 90 days trading horizon Adi Sarana Armada is expected to under-perform the Bayan Resources. But the stock apears to be less risky and, when comparing its historical volatility, Adi Sarana Armada is 1.22 times less risky than Bayan Resources. The stock trades about -0.07 of its potential returns per unit of risk. The Bayan Resources Tbk is currently generating about 0.45 of returns per unit of risk over similar time horizon. If you would invest 1,790,000 in Bayan Resources Tbk on September 14, 2024 and sell it today you would earn a total of 277,500 from holding Bayan Resources Tbk or generate 15.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Adi Sarana Armada vs. Bayan Resources Tbk
Performance |
| Timeline |
| Adi Sarana Armada |
| Bayan Resources Tbk |
Adi Sarana and Bayan Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Adi Sarana and Bayan Resources
The main advantage of trading using opposite Adi Sarana and Bayan Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Adi Sarana position performs unexpectedly, Bayan Resources 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 Bayan Resources will offset losses from the drop in Bayan Resources' long position.| Adi Sarana vs. PT Indonesia Kendaraan | Adi Sarana vs. Surya Toto Indonesia | Adi Sarana vs. Mitra Pinasthika Mustika | Adi Sarana vs. Integra Indocabinet Tbk |
| Bayan Resources vs. Harum Energy Tbk | Bayan Resources vs. Delta Dunia Makmur | Bayan Resources vs. Adi Sarana Armada | Bayan Resources vs. Elang Mahkota Teknologi |
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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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