Correlation Between BFI Finance and Adira Dinamika
Can any of the company-specific risk be diversified away by investing in both BFI Finance and Adira Dinamika 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 BFI Finance and Adira Dinamika into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BFI Finance Indonesia and Adira Dinamika Multi, you can compare the effects of market volatilities on BFI Finance and Adira Dinamika 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 BFI Finance with a short position of Adira Dinamika. Check out your portfolio center. Please also check ongoing floating volatility patterns of BFI Finance and Adira Dinamika.
Diversification Opportunities for BFI Finance and Adira Dinamika
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between BFI and Adira is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding BFI Finance Indonesia and Adira Dinamika Multi in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Adira Dinamika Multi and BFI 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 BFI Finance Indonesia are associated (or correlated) with Adira Dinamika. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Adira Dinamika Multi has no effect on the direction of BFI Finance i.e., BFI Finance and Adira Dinamika go up and down completely randomly.
Pair Corralation between BFI Finance and Adira Dinamika
Assuming the 90 days trading horizon BFI Finance Indonesia is expected to under-perform the Adira Dinamika. In addition to that, BFI Finance is 2.63 times more volatile than Adira Dinamika Multi. It trades about -0.14 of its total potential returns per unit of risk. Adira Dinamika Multi is currently generating about -0.36 per unit of volatility. If you would invest 1,102,500 in Adira Dinamika Multi on August 27, 2024 and sell it today you would lose (87,500) from holding Adira Dinamika Multi or give up 7.94% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
BFI Finance Indonesia vs. Adira Dinamika Multi
Performance |
| Timeline |
| BFI Finance Indonesia |
| Adira Dinamika Multi |
BFI Finance and Adira Dinamika Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BFI Finance and Adira Dinamika
The main advantage of trading using opposite BFI Finance and Adira Dinamika positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BFI Finance position performs unexpectedly, Adira Dinamika 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 Adira Dinamika will offset losses from the drop in Adira Dinamika's long position.| BFI Finance vs. Adira Dinamika Multi | BFI Finance vs. Clipan Finance Indonesia | BFI Finance vs. Sumber Alfaria Trijaya | BFI Finance vs. Bank Permata Tbk |
| Adira Dinamika vs. BFI Finance Indonesia | Adira Dinamika vs. Clipan Finance Indonesia | Adira Dinamika vs. Astra Otoparts Tbk | Adira Dinamika vs. Bank Danamon Indonesia |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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