Correlation Between BRIT AMER and PT Indo
Can any of the company-specific risk be diversified away by investing in both BRIT AMER and PT Indo 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 BRIT AMER and PT Indo into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BRIT AMER TOBACCO and PT Indo Tambangraya, you can compare the effects of market volatilities on BRIT AMER and PT Indo 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 BRIT AMER with a short position of PT Indo. Check out your portfolio center. Please also check ongoing floating volatility patterns of BRIT AMER and PT Indo.
Diversification Opportunities for BRIT AMER and PT Indo
Poor diversification
The 3 months correlation between BRIT and 3IB is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding BRIT AMER TOBACCO and PT Indo Tambangraya in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PT Indo Tambangraya and BRIT AMER 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 BRIT AMER TOBACCO are associated (or correlated) with PT Indo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PT Indo Tambangraya has no effect on the direction of BRIT AMER i.e., BRIT AMER and PT Indo go up and down completely randomly.
Pair Corralation between BRIT AMER and PT Indo
Assuming the 90 days trading horizon BRIT AMER TOBACCO is expected to generate 0.89 times more return on investment than PT Indo. However, BRIT AMER TOBACCO is 1.12 times less risky than PT Indo. It trades about 0.29 of its potential returns per unit of risk. PT Indo Tambangraya is currently generating about 0.04 per unit of risk. If you would invest 3,333 in BRIT AMER TOBACCO on September 14, 2024 and sell it today you would earn a total of 290.00 from holding BRIT AMER TOBACCO or generate 8.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
BRIT AMER TOBACCO vs. PT Indo Tambangraya
Performance |
| Timeline |
| BRIT AMER TOBACCO |
| PT Indo Tambangraya |
BRIT AMER and PT Indo Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BRIT AMER and PT Indo
The main advantage of trading using opposite BRIT AMER and PT Indo positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BRIT AMER position performs unexpectedly, PT Indo 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 PT Indo will offset losses from the drop in PT Indo's long position.| BRIT AMER vs. MEDICAL FACILITIES NEW | BRIT AMER vs. CompuGroup Medical SE | BRIT AMER vs. Commonwealth Bank of | BRIT AMER vs. SCANDMEDICAL SOLDK 040 |
| PT Indo vs. Quaker Chemical | PT Indo vs. Performance Food Group | PT Indo vs. AIR PRODCHEMICALS | PT Indo vs. NISSAN CHEMICAL IND |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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