Correlation Between PT Bayan and New HopeLimited
Can any of the company-specific risk be diversified away by investing in both PT Bayan and New HopeLimited 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 PT Bayan and New HopeLimited into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PT Bayan Resources and New Hope, you can compare the effects of market volatilities on PT Bayan and New HopeLimited 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 PT Bayan with a short position of New HopeLimited. Check out your portfolio center. Please also check ongoing floating volatility patterns of PT Bayan and New HopeLimited.
Diversification Opportunities for PT Bayan and New HopeLimited
0.3 | Correlation Coefficient |
Weak diversification
The 3 months correlation between BNB and New is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding PT Bayan Resources and New Hope in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on New HopeLimited and PT Bayan 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 PT Bayan Resources are associated (or correlated) with New HopeLimited. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of New HopeLimited has no effect on the direction of PT Bayan i.e., PT Bayan and New HopeLimited go up and down completely randomly.
Pair Corralation between PT Bayan and New HopeLimited
Assuming the 90 days horizon PT Bayan Resources is expected to generate 0.93 times more return on investment than New HopeLimited. However, PT Bayan Resources is 1.08 times less risky than New HopeLimited. It trades about 0.01 of its potential returns per unit of risk. New Hope is currently generating about 0.0 per unit of risk. If you would invest 115.00 in PT Bayan Resources on September 4, 2024 and sell it today you would earn a total of 0.00 from holding PT Bayan Resources or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
PT Bayan Resources vs. New Hope
Performance |
| Timeline |
| PT Bayan Resources |
| New HopeLimited |
PT Bayan and New HopeLimited Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PT Bayan and New HopeLimited
The main advantage of trading using opposite PT Bayan and New HopeLimited positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PT Bayan position performs unexpectedly, New HopeLimited 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 New HopeLimited will offset losses from the drop in New HopeLimited's long position.| PT Bayan vs. Yanzhou Coal Mining | PT Bayan vs. Yanzhou Coal Mining | PT Bayan vs. PT Adaro Energy | PT Bayan vs. Yancoal Australia |
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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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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