Correlation Between Barito Pacific and Kedaung Indah
Can any of the company-specific risk be diversified away by investing in both Barito Pacific and Kedaung Indah 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 Kedaung Indah 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 Kedaung Indah Can, you can compare the effects of market volatilities on Barito Pacific and Kedaung Indah 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 Kedaung Indah. Check out your portfolio center. Please also check ongoing floating volatility patterns of Barito Pacific and Kedaung Indah.
Diversification Opportunities for Barito Pacific and Kedaung Indah
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Barito and Kedaung is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Barito Pacific Tbk and Kedaung Indah Can in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kedaung Indah Can 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 Kedaung Indah. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kedaung Indah Can has no effect on the direction of Barito Pacific i.e., Barito Pacific and Kedaung Indah go up and down completely randomly.
Pair Corralation between Barito Pacific and Kedaung Indah
Assuming the 90 days trading horizon Barito Pacific Tbk is expected to generate 1.4 times more return on investment than Kedaung Indah. However, Barito Pacific is 1.4 times more volatile than Kedaung Indah Can. It trades about 0.24 of its potential returns per unit of risk. Kedaung Indah Can is currently generating about -0.11 per unit of risk. If you would invest 87,000 in Barito Pacific Tbk on October 22, 2024 and sell it today you would earn a total of 7,500 from holding Barito Pacific Tbk or generate 8.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Barito Pacific Tbk vs. Kedaung Indah Can
Performance |
| Timeline |
| Barito Pacific Tbk |
| Kedaung Indah Can |
Barito Pacific and Kedaung Indah Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Barito Pacific and Kedaung Indah
The main advantage of trading using opposite Barito Pacific and Kedaung Indah positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Barito Pacific position performs unexpectedly, Kedaung Indah 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 Kedaung Indah will offset losses from the drop in Kedaung Indah'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 |
| Kedaung Indah vs. Langgeng Makmur Industri | Kedaung Indah vs. Kedawung Setia Industrial | Kedaung Indah vs. Mustika Ratu Tbk | Kedaung Indah vs. Kabelindo Murni 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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