Correlation Between Bhuwanatala Indah and Timah Persero
Can any of the company-specific risk be diversified away by investing in both Bhuwanatala Indah and Timah Persero 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 Bhuwanatala Indah and Timah Persero into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bhuwanatala Indah Permai and Timah Persero Tbk, you can compare the effects of market volatilities on Bhuwanatala Indah and Timah Persero 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 Bhuwanatala Indah with a short position of Timah Persero. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bhuwanatala Indah and Timah Persero.
Diversification Opportunities for Bhuwanatala Indah and Timah Persero
0.48 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Bhuwanatala and Timah is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Bhuwanatala Indah Permai and Timah Persero Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Timah Persero Tbk and Bhuwanatala Indah 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 Bhuwanatala Indah Permai are associated (or correlated) with Timah Persero. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Timah Persero Tbk has no effect on the direction of Bhuwanatala Indah i.e., Bhuwanatala Indah and Timah Persero go up and down completely randomly.
Pair Corralation between Bhuwanatala Indah and Timah Persero
Assuming the 90 days trading horizon Bhuwanatala Indah Permai is expected to under-perform the Timah Persero. But the stock apears to be less risky and, when comparing its historical volatility, Bhuwanatala Indah Permai is 1.16 times less risky than Timah Persero. The stock trades about -0.02 of its potential returns per unit of risk. The Timah Persero Tbk is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 111,355 in Timah Persero Tbk on September 14, 2024 and sell it today you would earn a total of 9,645 from holding Timah Persero Tbk or generate 8.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bhuwanatala Indah Permai vs. Timah Persero Tbk
Performance |
| Timeline |
| Bhuwanatala Indah Permai |
| Timah Persero Tbk |
Bhuwanatala Indah and Timah Persero Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bhuwanatala Indah and Timah Persero
The main advantage of trading using opposite Bhuwanatala Indah and Timah Persero positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bhuwanatala Indah position performs unexpectedly, Timah Persero 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 Timah Persero will offset losses from the drop in Timah Persero's long position.| Bhuwanatala Indah vs. Ciputra Development Tbk | Bhuwanatala Indah vs. Bumi Serpong Damai | Bhuwanatala Indah vs. Alam Sutera Realty | Bhuwanatala Indah vs. Lippo Karawaci Tbk |
| Timah Persero vs. Kedaung Indah Can | Timah Persero vs. Kabelindo Murni Tbk | Timah Persero vs. Champion Pacific Indonesia | Timah Persero vs. Bhuwanatala Indah Permai |
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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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