Correlation Between Bayan Resources and Asia Pacific
Can any of the company-specific risk be diversified away by investing in both Bayan Resources and Asia Pacific 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 Asia Pacific 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 Asia Pacific Fibers, you can compare the effects of market volatilities on Bayan Resources and Asia Pacific 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 Asia Pacific. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bayan Resources and Asia Pacific.
Diversification Opportunities for Bayan Resources and Asia Pacific
-0.7 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Bayan and Asia is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Bayan Resources Tbk and Asia Pacific Fibers in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Asia Pacific Fibers 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 Asia Pacific. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Asia Pacific Fibers has no effect on the direction of Bayan Resources i.e., Bayan Resources and Asia Pacific go up and down completely randomly.
Pair Corralation between Bayan Resources and Asia Pacific
Assuming the 90 days trading horizon Bayan Resources Tbk is expected to generate 0.35 times more return on investment than Asia Pacific. However, Bayan Resources Tbk is 2.85 times less risky than Asia Pacific. It trades about 0.42 of its potential returns per unit of risk. Asia Pacific Fibers is currently generating about 0.08 per unit of risk. If you would invest 1,720,000 in Bayan Resources Tbk on September 1, 2024 and sell it today you would earn a total of 237,500 from holding Bayan Resources Tbk or generate 13.81% 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. Asia Pacific Fibers
Performance |
| Timeline |
| Bayan Resources Tbk |
| Asia Pacific Fibers |
Bayan Resources and Asia Pacific Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bayan Resources and Asia Pacific
The main advantage of trading using opposite Bayan Resources and Asia Pacific positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bayan Resources position performs unexpectedly, Asia Pacific 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 Asia Pacific will offset losses from the drop in Asia Pacific'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 |
| Asia Pacific vs. Japfa Comfeed Indonesia | Asia Pacific vs. Charoen Pokphand Indonesia | Asia Pacific vs. Erajaya Swasembada Tbk | Asia Pacific vs. Indofood Cbp Sukses |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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