Correlation Between Bayu Buana and Fortune Indonesia
Can any of the company-specific risk be diversified away by investing in both Bayu Buana and Fortune Indonesia 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 Fortune Indonesia 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 Fortune Indonesia Tbk, you can compare the effects of market volatilities on Bayu Buana and Fortune Indonesia 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 Fortune Indonesia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bayu Buana and Fortune Indonesia.
Diversification Opportunities for Bayu Buana and Fortune Indonesia
0.39 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Bayu and Fortune is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Bayu Buana Tbk and Fortune Indonesia Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fortune Indonesia 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 Fortune Indonesia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fortune Indonesia Tbk has no effect on the direction of Bayu Buana i.e., Bayu Buana and Fortune Indonesia go up and down completely randomly.
Pair Corralation between Bayu Buana and Fortune Indonesia
Assuming the 90 days trading horizon Bayu Buana Tbk is expected to generate 0.09 times more return on investment than Fortune Indonesia. However, Bayu Buana Tbk is 11.26 times less risky than Fortune Indonesia. It trades about 0.07 of its potential returns per unit of risk. Fortune Indonesia Tbk is currently generating about -0.04 per unit of risk. If you would invest 135,000 in Bayu Buana Tbk on October 22, 2024 and sell it today you would earn a total of 1,000.00 from holding Bayu Buana Tbk or generate 0.74% 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. Fortune Indonesia Tbk
Performance |
| Timeline |
| Bayu Buana Tbk |
| Fortune Indonesia Tbk |
Bayu Buana and Fortune Indonesia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bayu Buana and Fortune Indonesia
The main advantage of trading using opposite Bayu Buana and Fortune Indonesia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bayu Buana position performs unexpectedly, Fortune Indonesia 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 Fortune Indonesia will offset losses from the drop in Fortune Indonesia'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 |
| Fortune Indonesia vs. Gema Grahasarana Tbk | Fortune Indonesia vs. Bayu Buana Tbk | Fortune Indonesia vs. Fast Food Indonesia | Fortune Indonesia vs. Mahaka Media 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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