Correlation Between Bisi International and Indika Energy
Can any of the company-specific risk be diversified away by investing in both Bisi International and Indika Energy 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 Bisi International and Indika Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bisi International Tbk and Indika Energy Tbk, you can compare the effects of market volatilities on Bisi International and Indika Energy 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 Bisi International with a short position of Indika Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bisi International and Indika Energy.
Diversification Opportunities for Bisi International and Indika Energy
0.42 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Bisi and Indika is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Bisi International Tbk and Indika Energy Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Indika Energy Tbk and Bisi International 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 Bisi International Tbk are associated (or correlated) with Indika Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Indika Energy Tbk has no effect on the direction of Bisi International i.e., Bisi International and Indika Energy go up and down completely randomly.
Pair Corralation between Bisi International and Indika Energy
Assuming the 90 days trading horizon Bisi International Tbk is expected to under-perform the Indika Energy. But the stock apears to be less risky and, when comparing its historical volatility, Bisi International Tbk is 1.21 times less risky than Indika Energy. The stock trades about -0.04 of its potential returns per unit of risk. The Indika Energy Tbk is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest 178,987 in Indika Energy Tbk on August 31, 2024 and sell it today you would lose (36,987) from holding Indika Energy Tbk or give up 20.66% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.72% |
| Values | Daily Returns |
Bisi International Tbk vs. Indika Energy Tbk
Performance |
| Timeline |
| Bisi International Tbk |
| Indika Energy Tbk |
Bisi International and Indika Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bisi International and Indika Energy
The main advantage of trading using opposite Bisi International and Indika Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bisi International position performs unexpectedly, Indika Energy 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 Indika Energy will offset losses from the drop in Indika Energy's long position.| Bisi International vs. Sampoerna Agro Tbk | Bisi International vs. Bakrie Sumatera Plantations | Bisi International vs. Tunas Baru Lampung | Bisi International vs. Darma Henwa Tbk |
| Indika Energy vs. Indo Tambangraya Megah | Indika Energy vs. Adaro Energy Tbk | Indika Energy vs. Medco Energi Internasional | Indika Energy vs. Vale Indonesia 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
Other Complementary Tools
| Transaction History View history of all your transactions and understand their impact on performance | |
| Pattern Recognition Use different Pattern Recognition models to time the market across multiple global exchanges | |
| Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk | |
| Commodity Directory Find actively traded commodities issued by global exchanges | |
| Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. |