Correlation Between Bintang Oto and Electronic City
Can any of the company-specific risk be diversified away by investing in both Bintang Oto and Electronic City 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 Bintang Oto and Electronic City into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bintang Oto Global and Electronic City Indonesia, you can compare the effects of market volatilities on Bintang Oto and Electronic City 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 Bintang Oto with a short position of Electronic City. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bintang Oto and Electronic City.
Diversification Opportunities for Bintang Oto and Electronic City
0.51 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Bintang and Electronic is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Bintang Oto Global and Electronic City Indonesia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Electronic City Indonesia and Bintang Oto 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 Bintang Oto Global are associated (or correlated) with Electronic City. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Electronic City Indonesia has no effect on the direction of Bintang Oto i.e., Bintang Oto and Electronic City go up and down completely randomly.
Pair Corralation between Bintang Oto and Electronic City
Assuming the 90 days trading horizon Bintang Oto Global is expected to under-perform the Electronic City. But the stock apears to be less risky and, when comparing its historical volatility, Bintang Oto Global is 1.95 times less risky than Electronic City. The stock trades about -0.08 of its potential returns per unit of risk. The Electronic City Indonesia is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest 48,594 in Electronic City Indonesia on August 27, 2024 and sell it today you would lose (26,794) from holding Electronic City Indonesia or give up 55.14% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bintang Oto Global vs. Electronic City Indonesia
Performance |
| Timeline |
| Bintang Oto Global |
| Electronic City Indonesia |
Bintang Oto and Electronic City Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bintang Oto and Electronic City
The main advantage of trading using opposite Bintang Oto and Electronic City positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bintang Oto position performs unexpectedly, Electronic City 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 Electronic City will offset losses from the drop in Electronic City's long position.| Bintang Oto vs. Surya Permata Andalan | Bintang Oto vs. Aneka Gas Industri | Bintang Oto vs. Buana Listya Tama | Bintang Oto vs. Trisula Textile Industries |
| Electronic City vs. Catur Sentosa Adiprana | Electronic City vs. Fast Food Indonesia | Electronic City vs. Hero Supermarket Tbk | Electronic City vs. Graha Layar Prima |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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