Correlation Between Bayu Buana and Arita Prima
Can any of the company-specific risk be diversified away by investing in both Bayu Buana and Arita Prima 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 Arita Prima 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 Arita Prima Indonesia, you can compare the effects of market volatilities on Bayu Buana and Arita Prima 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 Arita Prima. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bayu Buana and Arita Prima.
Diversification Opportunities for Bayu Buana and Arita Prima
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Bayu and Arita is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Bayu Buana Tbk and Arita Prima Indonesia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arita Prima Indonesia 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 Arita Prima. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arita Prima Indonesia has no effect on the direction of Bayu Buana i.e., Bayu Buana and Arita Prima go up and down completely randomly.
Pair Corralation between Bayu Buana and Arita Prima
Assuming the 90 days trading horizon Bayu Buana Tbk is expected to under-perform the Arita Prima. But the stock apears to be less risky and, when comparing its historical volatility, Bayu Buana Tbk is 1.18 times less risky than Arita Prima. The stock trades about -0.03 of its potential returns per unit of risk. The Arita Prima Indonesia is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest 17,700 in Arita Prima Indonesia on August 30, 2024 and sell it today you would lose (200.00) from holding Arita Prima Indonesia or give up 1.13% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bayu Buana Tbk vs. Arita Prima Indonesia
Performance |
| Timeline |
| Bayu Buana Tbk |
| Arita Prima Indonesia |
Bayu Buana and Arita Prima Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bayu Buana and Arita Prima
The main advantage of trading using opposite Bayu Buana and Arita Prima positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bayu Buana position performs unexpectedly, Arita Prima 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 Arita Prima will offset losses from the drop in Arita Prima's long position.| Bayu Buana vs. Akbar Indomakmur Stimec | Bayu Buana vs. Mahaka Media Tbk | Bayu Buana vs. Fortune Indonesia Tbk | Bayu Buana vs. Gema Grahasarana Tbk |
| Arita Prima vs. Bintang Mitra Semestaraya | Arita Prima vs. Alkindo Naratama Tbk | Arita Prima vs. Bayu Buana Tbk | Arita Prima vs. Austindo Nusantara Jaya |
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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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