Correlation Between Bali Towerindo and Kencana Energi
Can any of the company-specific risk be diversified away by investing in both Bali Towerindo and Kencana Energi 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 Kencana Energi 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 Kencana Energi Lestari, you can compare the effects of market volatilities on Bali Towerindo and Kencana Energi 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 Kencana Energi. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bali Towerindo and Kencana Energi.
Diversification Opportunities for Bali Towerindo and Kencana Energi
-0.88 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Bali and Kencana is -0.88. Overlapping area represents the amount of risk that can be diversified away by holding Bali Towerindo Sentra and Kencana Energi Lestari in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kencana Energi Lestari 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 Kencana Energi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kencana Energi Lestari has no effect on the direction of Bali Towerindo i.e., Bali Towerindo and Kencana Energi go up and down completely randomly.
Pair Corralation between Bali Towerindo and Kencana Energi
Assuming the 90 days trading horizon Bali Towerindo Sentra is expected to generate 1.88 times more return on investment than Kencana Energi. However, Bali Towerindo is 1.88 times more volatile than Kencana Energi Lestari. It trades about 0.07 of its potential returns per unit of risk. Kencana Energi Lestari is currently generating about -0.01 per unit of risk. If you would invest 79,747 in Bali Towerindo Sentra on September 12, 2024 and sell it today you would earn a total of 69,253 from holding Bali Towerindo Sentra or generate 86.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bali Towerindo Sentra vs. Kencana Energi Lestari
Performance |
| Timeline |
| Bali Towerindo Sentra |
| Kencana Energi Lestari |
Bali Towerindo and Kencana Energi Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bali Towerindo and Kencana Energi
The main advantage of trading using opposite Bali Towerindo and Kencana Energi positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bali Towerindo position performs unexpectedly, Kencana Energi 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 Kencana Energi will offset losses from the drop in Kencana Energi's long position.| Bali Towerindo vs. Austindo Nusantara Jaya | Bali Towerindo vs. Inti Bangun Sejahtera | Bali Towerindo vs. Bukaka Teknik Utama | Bali Towerindo vs. Blue Bird Tbk |
| Kencana Energi vs. PT Indonesia Kendaraan | Kencana Energi vs. Cikarang Listrindo Tbk | Kencana Energi vs. Jasa Armada Indonesia | Kencana Energi vs. Pelita Samudera Shipping |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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