Correlation Between BASF SE and PT Barito
Can any of the company-specific risk be diversified away by investing in both BASF SE and PT Barito 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 BASF SE and PT Barito into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BASF SE and PT Barito Pacific, you can compare the effects of market volatilities on BASF SE and PT Barito 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 BASF SE with a short position of PT Barito. Check out your portfolio center. Please also check ongoing floating volatility patterns of BASF SE and PT Barito.
Diversification Opportunities for BASF SE and PT Barito
Very weak diversification
The 3 months correlation between BASF and OB8 is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding BASF SE and PT Barito Pacific in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PT Barito Pacific and BASF SE 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 BASF SE are associated (or correlated) with PT Barito. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PT Barito Pacific has no effect on the direction of BASF SE i.e., BASF SE and PT Barito go up and down completely randomly.
Pair Corralation between BASF SE and PT Barito
Assuming the 90 days horizon BASF SE is expected to under-perform the PT Barito. But the stock apears to be less risky and, when comparing its historical volatility, BASF SE is 3.93 times less risky than PT Barito. The stock trades about -0.46 of its potential returns per unit of risk. The PT Barito Pacific is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest 4.35 in PT Barito Pacific on October 14, 2024 and sell it today you would earn a total of 0.60 from holding PT Barito Pacific or generate 13.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
BASF SE vs. PT Barito Pacific
Performance |
| Timeline |
| BASF SE |
| PT Barito Pacific |
BASF SE and PT Barito Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BASF SE and PT Barito
The main advantage of trading using opposite BASF SE and PT Barito positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BASF SE position performs unexpectedly, PT Barito 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 PT Barito will offset losses from the drop in PT Barito's long position.| BASF SE vs. Allianz SE | BASF SE vs. Siemens Aktiengesellschaft | BASF SE vs. Bayer AG NA | BASF SE vs. SAP SE |
| PT Barito vs. AIR LIQUIDE ADR | PT Barito vs. Superior Plus Corp | PT Barito vs. NMI Holdings | PT Barito vs. SIVERS SEMICONDUCTORS AB |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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