Correlation Between Bakrieland Development and Exploitasi Energi

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Can any of the company-specific risk be diversified away by investing in both Bakrieland Development and Exploitasi Energi 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 Bakrieland Development and Exploitasi Energi into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bakrieland Development Tbk and Exploitasi Energi Indonesia, you can compare the effects of market volatilities on Bakrieland Development and Exploitasi Energi 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 Bakrieland Development with a short position of Exploitasi Energi. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bakrieland Development and Exploitasi Energi.

Diversification Opportunities for Bakrieland Development and Exploitasi Energi

-0.35
  Correlation Coefficient

Very good diversification

The 3 months correlation between Bakrieland and Exploitasi is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Bakrieland Development Tbk and Exploitasi Energi Indonesia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Exploitasi Energi and Bakrieland Development 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 Bakrieland Development Tbk are associated (or correlated) with Exploitasi Energi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Exploitasi Energi has no effect on the direction of Bakrieland Development i.e., Bakrieland Development and Exploitasi Energi go up and down completely randomly.

Pair Corralation between Bakrieland Development and Exploitasi Energi

Assuming the 90 days trading horizon Bakrieland Development Tbk is expected to under-perform the Exploitasi Energi. But the stock apears to be less risky and, when comparing its historical volatility, Bakrieland Development Tbk is 2.01 times less risky than Exploitasi Energi. The stock trades about -0.12 of its potential returns per unit of risk. The Exploitasi Energi Indonesia is currently generating about 0.38 of returns per unit of risk over similar time horizon. If you would invest  600.00  in Exploitasi Energi Indonesia on October 26, 2024 and sell it today you would earn a total of  2,800  from holding Exploitasi Energi Indonesia or generate 466.67% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Bakrieland Development Tbk  vs.  Exploitasi Energi Indonesia

 Performance 
       Timeline  
Bakrieland Development 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Bakrieland Development Tbk has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's forward-looking signals remain quite persistent which may send shares a bit higher in February 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.
Exploitasi Energi 

Risk-Adjusted Performance

29 of 100

 
Weak
 
Strong
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in Exploitasi Energi Indonesia are ranked lower than 29 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Exploitasi Energi disclosed solid returns over the last few months and may actually be approaching a breakup point.

Bakrieland Development and Exploitasi Energi Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Bakrieland Development and Exploitasi Energi

The main advantage of trading using opposite Bakrieland Development and Exploitasi Energi positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bakrieland Development position performs unexpectedly, Exploitasi Energi 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 Exploitasi Energi will offset losses from the drop in Exploitasi Energi's long position.
The idea behind Bakrieland Development Tbk and Exploitasi Energi Indonesia pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.

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