Correlation Between Centratama Telekomunikasi and Bayu Buana
Can any of the company-specific risk be diversified away by investing in both Centratama Telekomunikasi and Bayu Buana 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 Centratama Telekomunikasi and Bayu Buana into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Centratama Telekomunikasi Ind and Bayu Buana Tbk, you can compare the effects of market volatilities on Centratama Telekomunikasi and Bayu Buana 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 Centratama Telekomunikasi with a short position of Bayu Buana. Check out your portfolio center. Please also check ongoing floating volatility patterns of Centratama Telekomunikasi and Bayu Buana.
Diversification Opportunities for Centratama Telekomunikasi and Bayu Buana
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Centratama and Bayu is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Centratama Telekomunikasi Ind and Bayu Buana Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bayu Buana Tbk and Centratama Telekomunikasi 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 Centratama Telekomunikasi Ind are associated (or correlated) with Bayu Buana. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bayu Buana Tbk has no effect on the direction of Centratama Telekomunikasi i.e., Centratama Telekomunikasi and Bayu Buana go up and down completely randomly.
Pair Corralation between Centratama Telekomunikasi and Bayu Buana
Assuming the 90 days trading horizon Centratama Telekomunikasi Ind is expected to generate 2.58 times more return on investment than Bayu Buana. However, Centratama Telekomunikasi is 2.58 times more volatile than Bayu Buana Tbk. It trades about 0.07 of its potential returns per unit of risk. Bayu Buana Tbk is currently generating about 0.03 per unit of risk. If you would invest 3,800 in Centratama Telekomunikasi Ind on September 1, 2024 and sell it today you would earn a total of 900.00 from holding Centratama Telekomunikasi Ind or generate 23.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Centratama Telekomunikasi Ind vs. Bayu Buana Tbk
Performance |
| Timeline |
| Centratama Telekomunikasi |
| Bayu Buana Tbk |
Centratama Telekomunikasi and Bayu Buana Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Centratama Telekomunikasi and Bayu Buana
The main advantage of trading using opposite Centratama Telekomunikasi and Bayu Buana positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Centratama Telekomunikasi position performs unexpectedly, Bayu Buana 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 Bayu Buana will offset losses from the drop in Bayu Buana's long position.| Centratama Telekomunikasi vs. Indosat Tbk | Centratama Telekomunikasi vs. XL Axiata Tbk | Centratama Telekomunikasi vs. Energi Mega Persada | Centratama Telekomunikasi vs. Bakrie Brothers Tbk |
| Bayu Buana vs. Japfa Comfeed Indonesia | Bayu Buana vs. Charoen Pokphand Indonesia | Bayu Buana vs. Erajaya Swasembada Tbk | Bayu Buana 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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