Correlation Between Bayan Resources and Terregra Asia
Can any of the company-specific risk be diversified away by investing in both Bayan Resources and Terregra Asia 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 Terregra Asia 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 Terregra Asia Energy, you can compare the effects of market volatilities on Bayan Resources and Terregra Asia 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 Terregra Asia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bayan Resources and Terregra Asia.
Diversification Opportunities for Bayan Resources and Terregra Asia
-0.56 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Bayan and Terregra is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Bayan Resources Tbk and Terregra Asia Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Terregra Asia Energy 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 Terregra Asia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Terregra Asia Energy has no effect on the direction of Bayan Resources i.e., Bayan Resources and Terregra Asia go up and down completely randomly.
Pair Corralation between Bayan Resources and Terregra Asia
Assuming the 90 days trading horizon Bayan Resources Tbk is expected to generate 0.36 times more return on investment than Terregra Asia. However, Bayan Resources Tbk is 2.8 times less risky than Terregra Asia. It trades about 0.42 of its potential returns per unit of risk. Terregra Asia Energy is currently generating about -0.09 per unit of risk. If you would invest 1,710,000 in Bayan Resources Tbk on August 30, 2024 and sell it today you would earn a total of 247,500 from holding Bayan Resources Tbk or generate 14.47% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bayan Resources Tbk vs. Terregra Asia Energy
Performance |
| Timeline |
| Bayan Resources Tbk |
| Terregra Asia Energy |
Bayan Resources and Terregra Asia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bayan Resources and Terregra Asia
The main advantage of trading using opposite Bayan Resources and Terregra Asia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bayan Resources position performs unexpectedly, Terregra Asia 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 Terregra Asia will offset losses from the drop in Terregra Asia'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 |
| Terregra Asia vs. Aneka Tambang Persero | Terregra Asia vs. Bukit Asam Tbk | Terregra Asia vs. Telkom Indonesia Tbk | Terregra Asia vs. Astra International 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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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