Correlation Between Bayan Resources and Baramulti Suksessarana
Can any of the company-specific risk be diversified away by investing in both Bayan Resources and Baramulti Suksessarana 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 Baramulti Suksessarana 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 Baramulti Suksessarana Tbk, you can compare the effects of market volatilities on Bayan Resources and Baramulti Suksessarana 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 Baramulti Suksessarana. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bayan Resources and Baramulti Suksessarana.
Diversification Opportunities for Bayan Resources and Baramulti Suksessarana
-0.69 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Bayan and Baramulti is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding Bayan Resources Tbk and Baramulti Suksessarana Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Baramulti Suksessarana 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 Baramulti Suksessarana. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Baramulti Suksessarana has no effect on the direction of Bayan Resources i.e., Bayan Resources and Baramulti Suksessarana go up and down completely randomly.
Pair Corralation between Bayan Resources and Baramulti Suksessarana
Assuming the 90 days trading horizon Bayan Resources Tbk is expected to generate 1.64 times more return on investment than Baramulti Suksessarana. However, Bayan Resources is 1.64 times more volatile than Baramulti Suksessarana Tbk. It trades about 0.05 of its potential returns per unit of risk. Baramulti Suksessarana Tbk is currently generating about 0.06 per unit of risk. If you would invest 1,264,797 in Bayan Resources Tbk on August 26, 2024 and sell it today you would earn a total of 632,703 from holding Bayan Resources Tbk or generate 50.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bayan Resources Tbk vs. Baramulti Suksessarana Tbk
Performance |
| Timeline |
| Bayan Resources Tbk |
| Baramulti Suksessarana |
Bayan Resources and Baramulti Suksessarana Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bayan Resources and Baramulti Suksessarana
The main advantage of trading using opposite Bayan Resources and Baramulti Suksessarana positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bayan Resources position performs unexpectedly, Baramulti Suksessarana 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 Baramulti Suksessarana will offset losses from the drop in Baramulti Suksessarana'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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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