Correlation Between Bintang Oto and Uni Charm
Can any of the company-specific risk be diversified away by investing in both Bintang Oto and Uni Charm 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 Uni Charm 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 Uni Charm Indonesia, you can compare the effects of market volatilities on Bintang Oto and Uni Charm 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 Uni Charm. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bintang Oto and Uni Charm.
Diversification Opportunities for Bintang Oto and Uni Charm
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Bintang and Uni is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Bintang Oto Global and Uni Charm Indonesia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Uni Charm 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 Uni Charm. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Uni Charm Indonesia has no effect on the direction of Bintang Oto i.e., Bintang Oto and Uni Charm go up and down completely randomly.
Pair Corralation between Bintang Oto and Uni Charm
Assuming the 90 days trading horizon Bintang Oto Global is expected to generate 0.44 times more return on investment than Uni Charm. However, Bintang Oto Global is 2.27 times less risky than Uni Charm. It trades about -0.23 of its potential returns per unit of risk. Uni Charm Indonesia is currently generating about -0.37 per unit of risk. If you would invest 57,000 in Bintang Oto Global on September 1, 2024 and sell it today you would lose (3,000) from holding Bintang Oto Global or give up 5.26% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Bintang Oto Global vs. Uni Charm Indonesia
Performance |
| Timeline |
| Bintang Oto Global |
| Uni Charm Indonesia |
Bintang Oto and Uni Charm Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bintang Oto and Uni Charm
The main advantage of trading using opposite Bintang Oto and Uni Charm positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bintang Oto position performs unexpectedly, Uni Charm 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 Uni Charm will offset losses from the drop in Uni Charm's long position.| Bintang Oto vs. Japfa Comfeed Indonesia | Bintang Oto vs. Charoen Pokphand Indonesia | Bintang Oto vs. Erajaya Swasembada Tbk | Bintang Oto vs. Indofood Cbp Sukses |
| Uni Charm vs. Kino Indonesia Tbk | Uni Charm vs. Garudafood Putra Putri | Uni Charm vs. Mulia Boga Raya | Uni Charm vs. Ultra Jaya Milk |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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