Correlation Between Bayan Resources and Batulicin Nusantara
Can any of the company-specific risk be diversified away by investing in both Bayan Resources and Batulicin Nusantara 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 Batulicin Nusantara 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 Batulicin Nusantara Maritim, you can compare the effects of market volatilities on Bayan Resources and Batulicin Nusantara 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 Batulicin Nusantara. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bayan Resources and Batulicin Nusantara.
Diversification Opportunities for Bayan Resources and Batulicin Nusantara
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Bayan and Batulicin is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Bayan Resources Tbk and Batulicin Nusantara Maritim in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Batulicin Nusantara 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 Batulicin Nusantara. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Batulicin Nusantara has no effect on the direction of Bayan Resources i.e., Bayan Resources and Batulicin Nusantara go up and down completely randomly.
Pair Corralation between Bayan Resources and Batulicin Nusantara
Assuming the 90 days trading horizon Bayan Resources is expected to generate 5.37 times less return on investment than Batulicin Nusantara. But when comparing it to its historical volatility, Bayan Resources Tbk is 1.64 times less risky than Batulicin Nusantara. It trades about 0.02 of its potential returns per unit of risk. Batulicin Nusantara Maritim is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 16,900 in Batulicin Nusantara Maritim on November 2, 2024 and sell it today you would earn a total of 22,100 from holding Batulicin Nusantara Maritim or generate 130.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bayan Resources Tbk vs. Batulicin Nusantara Maritim
Performance |
| Timeline |
| Bayan Resources Tbk |
| Batulicin Nusantara |
Bayan Resources and Batulicin Nusantara Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bayan Resources and Batulicin Nusantara
The main advantage of trading using opposite Bayan Resources and Batulicin Nusantara positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bayan Resources position performs unexpectedly, Batulicin Nusantara 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 Batulicin Nusantara will offset losses from the drop in Batulicin Nusantara's long position.| Bayan Resources vs. Indo Tambangraya Megah | Bayan Resources vs. Indika Energy Tbk | Bayan Resources vs. Darma Henwa Tbk | Bayan Resources vs. Harum Energy 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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