Correlation Between Bayan Resources and Astra International
Can any of the company-specific risk be diversified away by investing in both Bayan Resources and Astra International 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 Bayan Resources and Astra International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bayan Resources Tbk and Astra International Tbk, you can compare the effects of market volatilities on Bayan Resources and Astra International 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 Bayan Resources with a short position of Astra International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bayan Resources and Astra International.
Diversification Opportunities for Bayan Resources and Astra International
-0.15 | Correlation Coefficient |
Good diversification
The 3 months correlation between Bayan and Astra is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Bayan Resources Tbk and Astra International Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Astra International Tbk and Bayan Resources 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 Bayan Resources Tbk are associated (or correlated) with Astra International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Astra International Tbk has no effect on the direction of Bayan Resources i.e., Bayan Resources and Astra International go up and down completely randomly.
Pair Corralation between Bayan Resources and Astra International
Assuming the 90 days trading horizon Bayan Resources Tbk is expected to generate 1.13 times more return on investment than Astra International. However, Bayan Resources is 1.13 times more volatile than Astra International Tbk. It trades about 0.36 of its potential returns per unit of risk. Astra International Tbk is currently generating about -0.28 per unit of risk. If you would invest 1,712,500 in Bayan Resources Tbk on August 24, 2024 and sell it today you would earn a total of 187,500 from holding Bayan Resources Tbk or generate 10.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bayan Resources Tbk vs. Astra International Tbk
Performance |
| Timeline |
| Bayan Resources Tbk |
| Astra International Tbk |
Bayan Resources and Astra International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bayan Resources and Astra International
The main advantage of trading using opposite Bayan Resources and Astra International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bayan Resources position performs unexpectedly, Astra International 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 Astra International will offset losses from the drop in Astra International's long position.| Bayan Resources vs. Petrosea Tbk | Bayan Resources vs. Harum Energy Tbk | Bayan Resources vs. Perdana Karya Perkasa | Bayan Resources vs. Samindo Resources Tbk |
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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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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