Correlation Between Bayan Resources and Perdana Karya
Can any of the company-specific risk be diversified away by investing in both Bayan Resources and Perdana Karya 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 Perdana Karya 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 Perdana Karya Perkasa, you can compare the effects of market volatilities on Bayan Resources and Perdana Karya 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 Perdana Karya. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bayan Resources and Perdana Karya.
Diversification Opportunities for Bayan Resources and Perdana Karya
0.1 | Correlation Coefficient |
Average diversification
The 3 months correlation between Bayan and Perdana is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Bayan Resources Tbk and Perdana Karya Perkasa in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Perdana Karya Perkasa 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 Perdana Karya. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Perdana Karya Perkasa has no effect on the direction of Bayan Resources i.e., Bayan Resources and Perdana Karya go up and down completely randomly.
Pair Corralation between Bayan Resources and Perdana Karya
Assuming the 90 days trading horizon Bayan Resources is expected to generate 2.73 times less return on investment than Perdana Karya. But when comparing it to its historical volatility, Bayan Resources Tbk is 4.84 times less risky than Perdana Karya. It trades about 0.26 of its potential returns per unit of risk. Perdana Karya Perkasa is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 48,600 in Perdana Karya Perkasa on September 12, 2024 and sell it today you would earn a total of 30,900 from holding Perdana Karya Perkasa or generate 63.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bayan Resources Tbk vs. Perdana Karya Perkasa
Performance |
| Timeline |
| Bayan Resources Tbk |
| Perdana Karya Perkasa |
Bayan Resources and Perdana Karya Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bayan Resources and Perdana Karya
The main advantage of trading using opposite Bayan Resources and Perdana Karya positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bayan Resources position performs unexpectedly, Perdana Karya 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 Perdana Karya will offset losses from the drop in Perdana Karya's long position.| Bayan Resources vs. Harum Energy Tbk | Bayan Resources vs. Delta Dunia Makmur | Bayan Resources vs. Adi Sarana Armada | Bayan Resources vs. Elang Mahkota Teknologi |
| Perdana Karya vs. Resource Alam Indonesia | Perdana Karya vs. Exploitasi Energi Indonesia | Perdana Karya vs. Asia Pacific Fibers |
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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