Correlation Between Buana Finance and Tifa Finance
Can any of the company-specific risk be diversified away by investing in both Buana Finance and Tifa 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 Tifa 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 Tifa Finance Tbk, you can compare the effects of market volatilities on Buana Finance and Tifa 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 Tifa Finance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Buana Finance and Tifa Finance.
Diversification Opportunities for Buana Finance and Tifa Finance
0.13 | Correlation Coefficient |
Average diversification
The 3 months correlation between Buana and Tifa is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Buana Finance Tbk and Tifa Finance Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tifa Finance Tbk 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 Tifa Finance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tifa Finance Tbk has no effect on the direction of Buana Finance i.e., Buana Finance and Tifa Finance go up and down completely randomly.
Pair Corralation between Buana Finance and Tifa Finance
Assuming the 90 days trading horizon Buana Finance Tbk is expected to generate 1.77 times more return on investment than Tifa Finance. However, Buana Finance is 1.77 times more volatile than Tifa Finance Tbk. It trades about 0.01 of its potential returns per unit of risk. Tifa Finance Tbk is currently generating about -0.01 per unit of risk. If you would invest 69,175 in Buana Finance Tbk on September 2, 2024 and sell it today you would lose (2,675) from holding Buana Finance Tbk or give up 3.87% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Buana Finance Tbk vs. Tifa Finance Tbk
Performance |
| Timeline |
| Buana Finance Tbk |
| Tifa Finance Tbk |
Buana Finance and Tifa Finance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Buana Finance and Tifa Finance
The main advantage of trading using opposite Buana Finance and Tifa Finance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Buana Finance position performs unexpectedly, Tifa 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 Tifa Finance will offset losses from the drop in Tifa 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 |
| Tifa Finance vs. Ace Hardware Indonesia | Tifa Finance vs. Merdeka Copper Gold | Tifa Finance vs. Mitra Pinasthika Mustika | Tifa Finance vs. Jakarta Int Hotels |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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