Correlation Between Bayan Resources and Goodyear Indonesia
Can any of the company-specific risk be diversified away by investing in both Bayan Resources and Goodyear Indonesia 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 Goodyear Indonesia 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 Goodyear Indonesia Tbk, you can compare the effects of market volatilities on Bayan Resources and Goodyear Indonesia 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 Goodyear Indonesia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bayan Resources and Goodyear Indonesia.
Diversification Opportunities for Bayan Resources and Goodyear Indonesia
-0.35 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Bayan and Goodyear is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Bayan Resources Tbk and Goodyear Indonesia Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Goodyear Indonesia 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 Goodyear Indonesia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Goodyear Indonesia Tbk has no effect on the direction of Bayan Resources i.e., Bayan Resources and Goodyear Indonesia go up and down completely randomly.
Pair Corralation between Bayan Resources and Goodyear Indonesia
Assuming the 90 days trading horizon Bayan Resources is expected to generate 3.58 times less return on investment than Goodyear Indonesia. But when comparing it to its historical volatility, Bayan Resources Tbk is 1.55 times less risky than Goodyear Indonesia. It trades about 0.01 of its potential returns per unit of risk. Goodyear Indonesia Tbk is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 140,500 in Goodyear Indonesia Tbk on August 25, 2024 and sell it today you would earn a total of 8,500 from holding Goodyear Indonesia Tbk or generate 6.05% 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. Goodyear Indonesia Tbk
Performance |
| Timeline |
| Bayan Resources Tbk |
| Goodyear Indonesia Tbk |
Bayan Resources and Goodyear Indonesia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bayan Resources and Goodyear Indonesia
The main advantage of trading using opposite Bayan Resources and Goodyear Indonesia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bayan Resources position performs unexpectedly, Goodyear Indonesia 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 Goodyear Indonesia will offset losses from the drop in Goodyear Indonesia'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 |
| Goodyear Indonesia vs. Indo Kordsa Tbk | Goodyear Indonesia vs. Indospring Tbk | Goodyear Indonesia vs. Sepatu Bata Tbk | Goodyear Indonesia vs. Astra Otoparts Tbk |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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