Correlation Between Barito Pacific and Indocement Tunggal
Can any of the company-specific risk be diversified away by investing in both Barito Pacific and Indocement Tunggal 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 Barito Pacific and Indocement Tunggal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Barito Pacific Tbk and Indocement Tunggal Prakarsa, you can compare the effects of market volatilities on Barito Pacific and Indocement Tunggal 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 Barito Pacific with a short position of Indocement Tunggal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Barito Pacific and Indocement Tunggal.
Diversification Opportunities for Barito Pacific and Indocement Tunggal
-0.08 | Correlation Coefficient |
Good diversification
The 3 months correlation between Barito and Indocement is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Barito Pacific Tbk and Indocement Tunggal Prakarsa in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Indocement Tunggal and Barito Pacific 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 Barito Pacific Tbk are associated (or correlated) with Indocement Tunggal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Indocement Tunggal has no effect on the direction of Barito Pacific i.e., Barito Pacific and Indocement Tunggal go up and down completely randomly.
Pair Corralation between Barito Pacific and Indocement Tunggal
Assuming the 90 days trading horizon Barito Pacific Tbk is expected to generate 2.16 times more return on investment than Indocement Tunggal. However, Barito Pacific is 2.16 times more volatile than Indocement Tunggal Prakarsa. It trades about 0.02 of its potential returns per unit of risk. Indocement Tunggal Prakarsa is currently generating about -0.04 per unit of risk. If you would invest 82,121 in Barito Pacific Tbk on August 27, 2024 and sell it today you would lose (2,121) from holding Barito Pacific Tbk or give up 2.58% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.77% |
| Values | Daily Returns |
Barito Pacific Tbk vs. Indocement Tunggal Prakarsa
Performance |
| Timeline |
| Barito Pacific Tbk |
| Indocement Tunggal |
Barito Pacific and Indocement Tunggal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Barito Pacific and Indocement Tunggal
The main advantage of trading using opposite Barito Pacific and Indocement Tunggal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Barito Pacific position performs unexpectedly, Indocement Tunggal 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 Indocement Tunggal will offset losses from the drop in Indocement Tunggal's long position.| Barito Pacific vs. Indah Kiat Pulp | Barito Pacific vs. Medco Energi Internasional | Barito Pacific vs. Vale Indonesia Tbk | Barito Pacific vs. Charoen Pokphand Indonesia |
| Indocement Tunggal vs. Semen Indonesia Persero | Indocement Tunggal vs. United Tractors Tbk | Indocement Tunggal vs. PT Indofood Sukses | Indocement Tunggal vs. Kalbe Farma Tbk |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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