Correlation Between Buana Listya and Bintang Oto
Can any of the company-specific risk be diversified away by investing in both Buana Listya and Bintang Oto 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 Buana Listya and Bintang Oto into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Buana Listya Tama and Bintang Oto Global, you can compare the effects of market volatilities on Buana Listya and Bintang Oto 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 Buana Listya with a short position of Bintang Oto. Check out your portfolio center. Please also check ongoing floating volatility patterns of Buana Listya and Bintang Oto.
Diversification Opportunities for Buana Listya and Bintang Oto
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Buana and Bintang is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Buana Listya Tama and Bintang Oto Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bintang Oto Global and Buana Listya 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 Buana Listya Tama are associated (or correlated) with Bintang Oto. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bintang Oto Global has no effect on the direction of Buana Listya i.e., Buana Listya and Bintang Oto go up and down completely randomly.
Pair Corralation between Buana Listya and Bintang Oto
Assuming the 90 days trading horizon Buana Listya Tama is expected to generate 0.59 times more return on investment than Bintang Oto. However, Buana Listya Tama is 1.71 times less risky than Bintang Oto. It trades about 0.29 of its potential returns per unit of risk. Bintang Oto Global is currently generating about 0.17 per unit of risk. If you would invest 11,500 in Buana Listya Tama on October 23, 2024 and sell it today you would earn a total of 1,300 from holding Buana Listya Tama or generate 11.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Buana Listya Tama vs. Bintang Oto Global
Performance |
| Timeline |
| Buana Listya Tama |
| Bintang Oto Global |
Buana Listya and Bintang Oto Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Buana Listya and Bintang Oto
The main advantage of trading using opposite Buana Listya and Bintang Oto positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Buana Listya position performs unexpectedly, Bintang Oto 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 Bintang Oto will offset losses from the drop in Bintang Oto's long position.| Buana Listya vs. Hotel Sahid Jaya | Buana Listya vs. Indo Acidatama Tbk | Buana Listya vs. Smartfren Telecom Tbk | Buana Listya vs. Mahaka Media Tbk |
| Bintang Oto vs. Surya Permata Andalan | Bintang Oto vs. Aneka Gas Industri | Bintang Oto vs. Buana Listya Tama | Bintang Oto vs. Trisula Textile Industries |
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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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