Correlation Between Bumi Teknokultura and Kedaung Indah
Can any of the company-specific risk be diversified away by investing in both Bumi Teknokultura 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 Bumi Teknokultura and Kedaung Indah into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bumi Teknokultura Unggul and Kedaung Indah Can, you can compare the effects of market volatilities on Bumi Teknokultura 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 Bumi Teknokultura with a short position of Kedaung Indah. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bumi Teknokultura and Kedaung Indah.
Diversification Opportunities for Bumi Teknokultura and Kedaung Indah
-0.05 | Correlation Coefficient |
Good diversification
The 3 months correlation between Bumi and Kedaung is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Bumi Teknokultura Unggul 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 Bumi Teknokultura 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 Bumi Teknokultura Unggul 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 Bumi Teknokultura i.e., Bumi Teknokultura and Kedaung Indah go up and down completely randomly.
Pair Corralation between Bumi Teknokultura and Kedaung Indah
Assuming the 90 days trading horizon Bumi Teknokultura Unggul is expected to generate 7.76 times more return on investment than Kedaung Indah. However, Bumi Teknokultura is 7.76 times more volatile than Kedaung Indah Can. It trades about 0.07 of its potential returns per unit of risk. Kedaung Indah Can is currently generating about -0.09 per unit of risk. If you would invest 400.00 in Bumi Teknokultura Unggul on August 30, 2024 and sell it today you would lose (100.00) from holding Bumi Teknokultura Unggul or give up 25.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bumi Teknokultura Unggul vs. Kedaung Indah Can
Performance |
| Timeline |
| Bumi Teknokultura Unggul |
| Kedaung Indah Can |
Bumi Teknokultura and Kedaung Indah Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bumi Teknokultura and Kedaung Indah
The main advantage of trading using opposite Bumi Teknokultura and Kedaung Indah positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bumi Teknokultura 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.| Bumi Teknokultura vs. Trinitan Metals and | Bumi Teknokultura vs. Bekasi Fajar Industrial | Bumi Teknokultura vs. Garuda Metalindo Tbk | Bumi Teknokultura vs. Hoffmen Cleanindo |
| Kedaung Indah vs. Pembangunan Jaya Ancol | Kedaung Indah vs. Panorama Sentrawisata Tbk | Kedaung Indah vs. Millennium Pharmacon International | Kedaung Indah vs. Tempo Inti Media |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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