Correlation Between Bukit Uluwatu and Cisarua Mountain
Can any of the company-specific risk be diversified away by investing in both Bukit Uluwatu and Cisarua Mountain 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 Bukit Uluwatu and Cisarua Mountain into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bukit Uluwatu Villa and Cisarua Mountain Dairy, you can compare the effects of market volatilities on Bukit Uluwatu and Cisarua Mountain 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 Bukit Uluwatu with a short position of Cisarua Mountain. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bukit Uluwatu and Cisarua Mountain.
Diversification Opportunities for Bukit Uluwatu and Cisarua Mountain
0.36 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Bukit and Cisarua is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Bukit Uluwatu Villa and Cisarua Mountain Dairy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cisarua Mountain Dairy and Bukit Uluwatu 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 Bukit Uluwatu Villa are associated (or correlated) with Cisarua Mountain. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cisarua Mountain Dairy has no effect on the direction of Bukit Uluwatu i.e., Bukit Uluwatu and Cisarua Mountain go up and down completely randomly.
Pair Corralation between Bukit Uluwatu and Cisarua Mountain
Assuming the 90 days trading horizon Bukit Uluwatu is expected to generate 1.55 times less return on investment than Cisarua Mountain. In addition to that, Bukit Uluwatu is 1.7 times more volatile than Cisarua Mountain Dairy. It trades about 0.02 of its total potential returns per unit of risk. Cisarua Mountain Dairy is currently generating about 0.05 per unit of volatility. If you would invest 492,000 in Cisarua Mountain Dairy on September 3, 2024 and sell it today you would earn a total of 58,000 from holding Cisarua Mountain Dairy or generate 11.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bukit Uluwatu Villa vs. Cisarua Mountain Dairy
Performance |
| Timeline |
| Bukit Uluwatu Villa |
| Cisarua Mountain Dairy |
Bukit Uluwatu and Cisarua Mountain Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bukit Uluwatu and Cisarua Mountain
The main advantage of trading using opposite Bukit Uluwatu and Cisarua Mountain positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bukit Uluwatu position performs unexpectedly, Cisarua Mountain 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 Cisarua Mountain will offset losses from the drop in Cisarua Mountain's long position.| Bukit Uluwatu vs. Alumindo Light Metal | Bukit Uluwatu vs. Kedawung Setia Industrial | Bukit Uluwatu vs. HK Metals Utama | Bukit Uluwatu vs. Wintermar Offshore Marine |
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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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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