Correlation Between China Shenhua and Bukit Asam
Can any of the company-specific risk be diversified away by investing in both China Shenhua and Bukit Asam 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 China Shenhua and Bukit Asam into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between China Shenhua Energy and Bukit Asam Tbk, you can compare the effects of market volatilities on China Shenhua and Bukit Asam 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 China Shenhua with a short position of Bukit Asam. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Shenhua and Bukit Asam.
Diversification Opportunities for China Shenhua and Bukit Asam
0.26 | Correlation Coefficient |
Modest diversification
The 3 months correlation between China and Bukit is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding China Shenhua Energy and Bukit Asam Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bukit Asam Tbk and China Shenhua 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 China Shenhua Energy are associated (or correlated) with Bukit Asam. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bukit Asam Tbk has no effect on the direction of China Shenhua i.e., China Shenhua and Bukit Asam go up and down completely randomly.
Pair Corralation between China Shenhua and Bukit Asam
Assuming the 90 days horizon China Shenhua Energy is expected to under-perform the Bukit Asam. But the pink sheet apears to be less risky and, when comparing its historical volatility, China Shenhua Energy is 1.04 times less risky than Bukit Asam. The pink sheet trades about -0.01 of its potential returns per unit of risk. The Bukit Asam Tbk is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 400.00 in Bukit Asam Tbk on September 2, 2024 and sell it today you would earn a total of 69.00 from holding Bukit Asam Tbk or generate 17.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
China Shenhua Energy vs. Bukit Asam Tbk
Performance |
| Timeline |
| China Shenhua Energy |
| Bukit Asam Tbk |
China Shenhua and Bukit Asam Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Shenhua and Bukit Asam
The main advantage of trading using opposite China Shenhua and Bukit Asam positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Shenhua position performs unexpectedly, Bukit Asam 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 Bukit Asam will offset losses from the drop in Bukit Asam's long position.| China Shenhua vs. Bukit Asam Tbk | China Shenhua vs. Indo Tambangraya Megah | China Shenhua vs. Thungela Resources Limited |
| Bukit Asam vs. Nascent Wine | Bukit Asam vs. Topbuild Corp | Bukit Asam vs. Simpson Manufacturing | Bukit Asam vs. Diamond Estates Wines |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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