Correlation Between Bayu Buana and Centratama Telekomunikasi
Can any of the company-specific risk be diversified away by investing in both Bayu Buana and Centratama Telekomunikasi 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 Centratama Telekomunikasi 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 Centratama Telekomunikasi Ind, you can compare the effects of market volatilities on Bayu Buana and Centratama Telekomunikasi 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 Centratama Telekomunikasi. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bayu Buana and Centratama Telekomunikasi.
Diversification Opportunities for Bayu Buana and Centratama Telekomunikasi
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Bayu and Centratama is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Bayu Buana Tbk and Centratama Telekomunikasi Ind in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Centratama Telekomunikasi 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 Centratama Telekomunikasi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Centratama Telekomunikasi has no effect on the direction of Bayu Buana i.e., Bayu Buana and Centratama Telekomunikasi go up and down completely randomly.
Pair Corralation between Bayu Buana and Centratama Telekomunikasi
Assuming the 90 days trading horizon Bayu Buana Tbk is expected to generate 0.4 times more return on investment than Centratama Telekomunikasi. However, Bayu Buana Tbk is 2.5 times less risky than Centratama Telekomunikasi. It trades about -0.06 of its potential returns per unit of risk. Centratama Telekomunikasi Ind is currently generating about -0.1 per unit of risk. If you would invest 142,500 in Bayu Buana Tbk on October 26, 2024 and sell it today you would lose (7,000) from holding Bayu Buana Tbk or give up 4.91% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bayu Buana Tbk vs. Centratama Telekomunikasi Ind
Performance |
| Timeline |
| Bayu Buana Tbk |
| Centratama Telekomunikasi |
Bayu Buana and Centratama Telekomunikasi Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bayu Buana and Centratama Telekomunikasi
The main advantage of trading using opposite Bayu Buana and Centratama Telekomunikasi positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bayu Buana position performs unexpectedly, Centratama Telekomunikasi 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 Centratama Telekomunikasi will offset losses from the drop in Centratama Telekomunikasi'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 |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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