Correlation Between Bayu Buana and Alakasa Industrindo
Can any of the company-specific risk be diversified away by investing in both Bayu Buana and Alakasa Industrindo 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 Bayu Buana and Alakasa Industrindo into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bayu Buana Tbk and Alakasa Industrindo Tbk, you can compare the effects of market volatilities on Bayu Buana and Alakasa Industrindo 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 Bayu Buana with a short position of Alakasa Industrindo. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bayu Buana and Alakasa Industrindo.
Diversification Opportunities for Bayu Buana and Alakasa Industrindo
0.34 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Bayu and Alakasa is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Bayu Buana Tbk and Alakasa Industrindo Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alakasa Industrindo Tbk and Bayu Buana 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 Bayu Buana Tbk are associated (or correlated) with Alakasa Industrindo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alakasa Industrindo Tbk has no effect on the direction of Bayu Buana i.e., Bayu Buana and Alakasa Industrindo go up and down completely randomly.
Pair Corralation between Bayu Buana and Alakasa Industrindo
Assuming the 90 days trading horizon Bayu Buana Tbk is expected to generate 0.39 times more return on investment than Alakasa Industrindo. However, Bayu Buana Tbk is 2.59 times less risky than Alakasa Industrindo. It trades about 0.02 of its potential returns per unit of risk. Alakasa Industrindo Tbk is currently generating about 0.0 per unit of risk. If you would invest 130,418 in Bayu Buana Tbk on September 1, 2024 and sell it today you would earn a total of 3,582 from holding Bayu Buana Tbk or generate 2.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bayu Buana Tbk vs. Alakasa Industrindo Tbk
Performance |
| Timeline |
| Bayu Buana Tbk |
| Alakasa Industrindo Tbk |
Bayu Buana and Alakasa Industrindo Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bayu Buana and Alakasa Industrindo
The main advantage of trading using opposite Bayu Buana and Alakasa Industrindo positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bayu Buana position performs unexpectedly, Alakasa Industrindo 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 Alakasa Industrindo will offset losses from the drop in Alakasa Industrindo's long position.| Bayu Buana vs. Japfa Comfeed Indonesia | Bayu Buana vs. Charoen Pokphand Indonesia | Bayu Buana vs. Erajaya Swasembada Tbk | Bayu Buana vs. Indofood Cbp Sukses |
| Alakasa Industrindo vs. Argha Karya Prima | Alakasa Industrindo vs. Alumindo Light Metal | Alakasa Industrindo vs. Asiaplast Industries Tbk | Alakasa Industrindo vs. Akbar Indomakmur Stimec |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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