Correlation Between Bakrie Brothers and RMK Energy
Can any of the company-specific risk be diversified away by investing in both Bakrie Brothers and RMK 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 Bakrie Brothers and RMK Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bakrie Brothers Tbk and RMK Energy PT, you can compare the effects of market volatilities on Bakrie Brothers and RMK 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 Bakrie Brothers with a short position of RMK Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bakrie Brothers and RMK Energy.
Diversification Opportunities for Bakrie Brothers and RMK Energy
-0.67 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Bakrie and RMK is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Bakrie Brothers Tbk and RMK Energy PT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RMK Energy PT and Bakrie Brothers 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 Bakrie Brothers Tbk are associated (or correlated) with RMK Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RMK Energy PT has no effect on the direction of Bakrie Brothers i.e., Bakrie Brothers and RMK Energy go up and down completely randomly.
Pair Corralation between Bakrie Brothers and RMK Energy
Assuming the 90 days trading horizon Bakrie Brothers Tbk is expected to generate 2.17 times more return on investment than RMK Energy. However, Bakrie Brothers is 2.17 times more volatile than RMK Energy PT. It trades about 0.03 of its potential returns per unit of risk. RMK Energy PT is currently generating about 0.02 per unit of risk. If you would invest 4,500 in Bakrie Brothers Tbk on August 29, 2024 and sell it today you would earn a total of 100.00 from holding Bakrie Brothers Tbk or generate 2.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bakrie Brothers Tbk vs. RMK Energy PT
Performance |
| Timeline |
| Bakrie Brothers Tbk |
| RMK Energy PT |
Bakrie Brothers and RMK Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bakrie Brothers and RMK Energy
The main advantage of trading using opposite Bakrie Brothers and RMK Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bakrie Brothers position performs unexpectedly, RMK 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 RMK Energy will offset losses from the drop in RMK Energy's long position.| Bakrie Brothers vs. Bakrieland Development Tbk | Bakrie Brothers vs. Bakrie Sumatera Plantations | Bakrie Brothers vs. Energi Mega Persada | Bakrie Brothers vs. Darma Henwa Tbk |
| RMK Energy vs. Adaro Minerals Indonesia | RMK Energy vs. Prima Andalan Mandiri | RMK Energy vs. Sumber Global Energy | RMK Energy vs. Golden Eagle Energy |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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