Correlation Between Bali Towerindo and Blue Bird
Can any of the company-specific risk be diversified away by investing in both Bali Towerindo and Blue Bird 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 Bali Towerindo and Blue Bird into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bali Towerindo Sentra and Blue Bird Tbk, you can compare the effects of market volatilities on Bali Towerindo and Blue Bird 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 Bali Towerindo with a short position of Blue Bird. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bali Towerindo and Blue Bird.
Diversification Opportunities for Bali Towerindo and Blue Bird
0.42 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Bali and Blue is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Bali Towerindo Sentra and Blue Bird Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Blue Bird Tbk and Bali Towerindo 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 Bali Towerindo Sentra are associated (or correlated) with Blue Bird. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Blue Bird Tbk has no effect on the direction of Bali Towerindo i.e., Bali Towerindo and Blue Bird go up and down completely randomly.
Pair Corralation between Bali Towerindo and Blue Bird
Assuming the 90 days trading horizon Bali Towerindo Sentra is expected to generate 1.75 times more return on investment than Blue Bird. However, Bali Towerindo is 1.75 times more volatile than Blue Bird Tbk. It trades about 0.39 of its potential returns per unit of risk. Blue Bird Tbk is currently generating about 0.04 per unit of risk. If you would invest 80,500 in Bali Towerindo Sentra on August 28, 2024 and sell it today you would earn a total of 67,000 from holding Bali Towerindo Sentra or generate 83.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bali Towerindo Sentra vs. Blue Bird Tbk
Performance |
| Timeline |
| Bali Towerindo Sentra |
| Blue Bird Tbk |
Bali Towerindo and Blue Bird Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bali Towerindo and Blue Bird
The main advantage of trading using opposite Bali Towerindo and Blue Bird positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bali Towerindo position performs unexpectedly, Blue Bird 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 Blue Bird will offset losses from the drop in Blue Bird's long position.| Bali Towerindo vs. Mnc Land Tbk | Bali Towerindo vs. MNC Vision Networks | Bali Towerindo vs. Medikaloka Hermina PT |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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