Correlation Between Bakrieland Development and Central Proteina
Can any of the company-specific risk be diversified away by investing in both Bakrieland Development and Central Proteina 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 Central Proteina 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 Central Proteina Prima, you can compare the effects of market volatilities on Bakrieland Development and Central Proteina 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 Central Proteina. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bakrieland Development and Central Proteina.
Diversification Opportunities for Bakrieland Development and Central Proteina
0.15 | Correlation Coefficient |
Average diversification
The 3 months correlation between Bakrieland and Central is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Bakrieland Development Tbk and Central Proteina Prima in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Central Proteina Prima 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 Central Proteina. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Central Proteina Prima has no effect on the direction of Bakrieland Development i.e., Bakrieland Development and Central Proteina go up and down completely randomly.
Pair Corralation between Bakrieland Development and Central Proteina
Assuming the 90 days trading horizon Bakrieland Development is expected to generate 2.2 times less return on investment than Central Proteina. But when comparing it to its historical volatility, Bakrieland Development Tbk is 1.14 times less risky than Central Proteina. It trades about 0.02 of its potential returns per unit of risk. Central Proteina Prima is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 5,000 in Central Proteina Prima on October 26, 2024 and sell it today you would earn a total of 100.00 from holding Central Proteina Prima or generate 2.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 94.74% |
| Values | Daily Returns |
Bakrieland Development Tbk vs. Central Proteina Prima
Performance |
| Timeline |
| Bakrieland Development |
| Central Proteina Prima |
Bakrieland Development and Central Proteina Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bakrieland Development and Central Proteina
The main advantage of trading using opposite Bakrieland Development and Central Proteina positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bakrieland Development position performs unexpectedly, Central Proteina 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 Central Proteina will offset losses from the drop in Central Proteina's long position.| Bakrieland Development vs. Bakrie Brothers Tbk | Bakrieland Development vs. Bakrie Sumatera Plantations | Bakrieland Development vs. Energi Mega Persada | Bakrieland Development vs. Darma Henwa Tbk |
| Central Proteina vs. Bakrie Brothers Tbk | Central Proteina vs. Bakrieland Development Tbk | Central Proteina vs. Darma Henwa Tbk | Central Proteina vs. Bakrie Sumatera Plantations |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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