Correlation Between Bayan Resources and Jakarta Setiabudi
Can any of the company-specific risk be diversified away by investing in both Bayan Resources and Jakarta Setiabudi 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 Jakarta Setiabudi 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 Jakarta Setiabudi Internasional, you can compare the effects of market volatilities on Bayan Resources and Jakarta Setiabudi 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 Jakarta Setiabudi. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bayan Resources and Jakarta Setiabudi.
Diversification Opportunities for Bayan Resources and Jakarta Setiabudi
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Bayan and Jakarta is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Bayan Resources Tbk and Jakarta Setiabudi Internasiona in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jakarta Setiabudi 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 Jakarta Setiabudi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jakarta Setiabudi has no effect on the direction of Bayan Resources i.e., Bayan Resources and Jakarta Setiabudi go up and down completely randomly.
Pair Corralation between Bayan Resources and Jakarta Setiabudi
Assuming the 90 days trading horizon Bayan Resources is expected to generate 5.39 times less return on investment than Jakarta Setiabudi. But when comparing it to its historical volatility, Bayan Resources Tbk is 8.15 times less risky than Jakarta Setiabudi. It trades about 0.43 of its potential returns per unit of risk. Jakarta Setiabudi Internasional is currently generating about 0.28 of returns per unit of risk over similar time horizon. If you would invest 438,000 in Jakarta Setiabudi Internasional on August 30, 2024 and sell it today you would earn a total of 359,500 from holding Jakarta Setiabudi Internasional or generate 82.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bayan Resources Tbk vs. Jakarta Setiabudi Internasiona
Performance |
| Timeline |
| Bayan Resources Tbk |
| Jakarta Setiabudi |
Bayan Resources and Jakarta Setiabudi Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bayan Resources and Jakarta Setiabudi
The main advantage of trading using opposite Bayan Resources and Jakarta Setiabudi positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bayan Resources position performs unexpectedly, Jakarta Setiabudi 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 Jakarta Setiabudi will offset losses from the drop in Jakarta Setiabudi'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 |
| Jakarta Setiabudi vs. Jasuindo Tiga Perkasa | Jakarta Setiabudi vs. Jakarta Int Hotels | Jakarta Setiabudi vs. Inter Delta Tbk | Jakarta Setiabudi vs. Pudjiadi Sons 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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