Correlation Between Bali Bintang and Kencana Energi
Can any of the company-specific risk be diversified away by investing in both Bali Bintang and Kencana Energi 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 Bali Bintang and Kencana Energi into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bali Bintang Sejahtera and Kencana Energi Lestari, you can compare the effects of market volatilities on Bali Bintang and Kencana Energi 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 Bali Bintang with a short position of Kencana Energi. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bali Bintang and Kencana Energi.
Diversification Opportunities for Bali Bintang and Kencana Energi
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Bali and Kencana is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Bali Bintang Sejahtera and Kencana Energi Lestari in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kencana Energi Lestari and Bali Bintang 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 Bali Bintang Sejahtera are associated (or correlated) with Kencana Energi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kencana Energi Lestari has no effect on the direction of Bali Bintang i.e., Bali Bintang and Kencana Energi go up and down completely randomly.
Pair Corralation between Bali Bintang and Kencana Energi
Assuming the 90 days trading horizon Bali Bintang Sejahtera is expected to under-perform the Kencana Energi. But the stock apears to be less risky and, when comparing its historical volatility, Bali Bintang Sejahtera is 2.15 times less risky than Kencana Energi. The stock trades about -0.07 of its potential returns per unit of risk. The Kencana Energi Lestari is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 59,500 in Kencana Energi Lestari on November 3, 2024 and sell it today you would earn a total of 4,500 from holding Kencana Energi Lestari or generate 7.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bali Bintang Sejahtera vs. Kencana Energi Lestari
Performance |
| Timeline |
| Bali Bintang Sejahtera |
| Kencana Energi Lestari |
Bali Bintang and Kencana Energi Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bali Bintang and Kencana Energi
The main advantage of trading using opposite Bali Bintang and Kencana Energi positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bali Bintang position performs unexpectedly, Kencana Energi 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 Kencana Energi will offset losses from the drop in Kencana Energi's long position.| Bali Bintang vs. MD Pictures Tbk | Bali Bintang vs. MNC Studios International | Bali Bintang vs. MNC Vision Networks | Bali Bintang vs. Digital Mediatama Maxima |
| Kencana Energi vs. PT Indonesia Kendaraan | Kencana Energi vs. Cikarang Listrindo Tbk | Kencana Energi vs. Jasa Armada Indonesia | Kencana Energi vs. Pelita Samudera Shipping |
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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