Correlation Between Bayan Resources and Berlian Laju
Can any of the company-specific risk be diversified away by investing in both Bayan Resources and Berlian Laju 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 Berlian Laju 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 Berlian Laju Tanker, you can compare the effects of market volatilities on Bayan Resources and Berlian Laju 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 Berlian Laju. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bayan Resources and Berlian Laju.
Diversification Opportunities for Bayan Resources and Berlian Laju
-0.07 | Correlation Coefficient |
Good diversification
The 3 months correlation between Bayan and Berlian is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Bayan Resources Tbk and Berlian Laju Tanker in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Berlian Laju Tanker 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 Berlian Laju. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Berlian Laju Tanker has no effect on the direction of Bayan Resources i.e., Bayan Resources and Berlian Laju go up and down completely randomly.
Pair Corralation between Bayan Resources and Berlian Laju
Assuming the 90 days trading horizon Bayan Resources is expected to generate 2.93 times less return on investment than Berlian Laju. But when comparing it to its historical volatility, Bayan Resources Tbk is 1.93 times less risky than Berlian Laju. It trades about 0.05 of its potential returns per unit of risk. Berlian Laju Tanker is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 1,600 in Berlian Laju Tanker on September 3, 2024 and sell it today you would earn a total of 500.00 from holding Berlian Laju Tanker or generate 31.25% 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. Berlian Laju Tanker
Performance |
| Timeline |
| Bayan Resources Tbk |
| Berlian Laju Tanker |
Bayan Resources and Berlian Laju Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bayan Resources and Berlian Laju
The main advantage of trading using opposite Bayan Resources and Berlian Laju positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bayan Resources position performs unexpectedly, Berlian Laju 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 Berlian Laju will offset losses from the drop in Berlian Laju'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 |
| Berlian Laju vs. Intanwijaya Internasional Tbk | Berlian Laju vs. Champion Pacific Indonesia | Berlian Laju vs. Mitra Pinasthika Mustika | Berlian Laju vs. Jakarta Int Hotels |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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