Correlation Between Buana Finance and BFI Finance
Can any of the company-specific risk be diversified away by investing in both Buana Finance and BFI Finance 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 Buana Finance and BFI Finance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Buana Finance Tbk and BFI Finance Indonesia, you can compare the effects of market volatilities on Buana Finance and BFI Finance 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 Buana Finance with a short position of BFI Finance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Buana Finance and BFI Finance.
Diversification Opportunities for Buana Finance and BFI Finance
0.19 | Correlation Coefficient |
Average diversification
The 3 months correlation between Buana and BFI is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Buana Finance Tbk and BFI Finance Indonesia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BFI Finance Indonesia and Buana Finance 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 Buana Finance Tbk are associated (or correlated) with BFI Finance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BFI Finance Indonesia has no effect on the direction of Buana Finance i.e., Buana Finance and BFI Finance go up and down completely randomly.
Pair Corralation between Buana Finance and BFI Finance
Assuming the 90 days trading horizon Buana Finance Tbk is expected to generate 1.17 times more return on investment than BFI Finance. However, Buana Finance is 1.17 times more volatile than BFI Finance Indonesia. It trades about 0.06 of its potential returns per unit of risk. BFI Finance Indonesia is currently generating about -0.01 per unit of risk. If you would invest 56,500 in Buana Finance Tbk on September 2, 2024 and sell it today you would earn a total of 10,000 from holding Buana Finance Tbk or generate 17.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Buana Finance Tbk vs. BFI Finance Indonesia
Performance |
| Timeline |
| Buana Finance Tbk |
| BFI Finance Indonesia |
Buana Finance and BFI Finance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Buana Finance and BFI Finance
The main advantage of trading using opposite Buana Finance and BFI Finance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Buana Finance position performs unexpectedly, BFI Finance 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 BFI Finance will offset losses from the drop in BFI Finance's long position.| Buana Finance vs. Asuransi Ramayana Tbk | Buana Finance vs. Clipan Finance Indonesia | Buana Finance vs. Asuransi Bintang Tbk | Buana Finance vs. Asuransi Dayin Mitra |
| BFI Finance vs. Adira Dinamika Multi | BFI Finance vs. Clipan Finance Indonesia | BFI Finance vs. Sumber Alfaria Trijaya | BFI Finance vs. Bank Permata 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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