Correlation Between Benakat Petroleum and Matahari Department
Can any of the company-specific risk be diversified away by investing in both Benakat Petroleum and Matahari Department 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 Benakat Petroleum and Matahari Department into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Benakat Petroleum Energy and Matahari Department Store, you can compare the effects of market volatilities on Benakat Petroleum and Matahari Department 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 Benakat Petroleum with a short position of Matahari Department. Check out your portfolio center. Please also check ongoing floating volatility patterns of Benakat Petroleum and Matahari Department.
Diversification Opportunities for Benakat Petroleum and Matahari Department
-0.38 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Benakat and Matahari is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Benakat Petroleum Energy and Matahari Department Store in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Matahari Department Store and Benakat Petroleum 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 Benakat Petroleum Energy are associated (or correlated) with Matahari Department. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Matahari Department Store has no effect on the direction of Benakat Petroleum i.e., Benakat Petroleum and Matahari Department go up and down completely randomly.
Pair Corralation between Benakat Petroleum and Matahari Department
Assuming the 90 days trading horizon Benakat Petroleum Energy is expected to under-perform the Matahari Department. In addition to that, Benakat Petroleum is 2.85 times more volatile than Matahari Department Store. It trades about -0.18 of its total potential returns per unit of risk. Matahari Department Store is currently generating about -0.38 per unit of volatility. If you would invest 158,000 in Matahari Department Store on August 28, 2024 and sell it today you would lose (17,000) from holding Matahari Department Store or give up 10.76% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Benakat Petroleum Energy vs. Matahari Department Store
Performance |
| Timeline |
| Benakat Petroleum Energy |
| Matahari Department Store |
Benakat Petroleum and Matahari Department Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Benakat Petroleum and Matahari Department
The main advantage of trading using opposite Benakat Petroleum and Matahari Department positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Benakat Petroleum position performs unexpectedly, Matahari Department 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 Matahari Department will offset losses from the drop in Matahari Department's long position.| Benakat Petroleum vs. Bumi Resources Minerals | Benakat Petroleum vs. Energi Mega Persada | Benakat Petroleum vs. Delta Dunia Makmur | Benakat Petroleum vs. Darma Henwa Tbk |
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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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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