Correlation Between Elang Mahkota and Bayan Resources
Can any of the company-specific risk be diversified away by investing in both Elang Mahkota and Bayan Resources 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 Elang Mahkota and Bayan Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Elang Mahkota Teknologi and Bayan Resources Tbk, you can compare the effects of market volatilities on Elang Mahkota and Bayan Resources 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 Elang Mahkota with a short position of Bayan Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Elang Mahkota and Bayan Resources.
Diversification Opportunities for Elang Mahkota and Bayan Resources
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Elang and Bayan is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Elang Mahkota Teknologi and Bayan Resources Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bayan Resources Tbk and Elang Mahkota 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 Elang Mahkota Teknologi are associated (or correlated) with Bayan Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bayan Resources Tbk has no effect on the direction of Elang Mahkota i.e., Elang Mahkota and Bayan Resources go up and down completely randomly.
Pair Corralation between Elang Mahkota and Bayan Resources
Assuming the 90 days trading horizon Elang Mahkota Teknologi is expected to generate 1.85 times more return on investment than Bayan Resources. However, Elang Mahkota is 1.85 times more volatile than Bayan Resources Tbk. It trades about 0.02 of its potential returns per unit of risk. Bayan Resources Tbk is currently generating about 0.03 per unit of risk. If you would invest 57,402 in Elang Mahkota Teknologi on September 14, 2024 and sell it today you would earn a total of 3,098 from holding Elang Mahkota Teknologi or generate 5.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Elang Mahkota Teknologi vs. Bayan Resources Tbk
Performance |
| Timeline |
| Elang Mahkota Teknologi |
| Bayan Resources Tbk |
Elang Mahkota and Bayan Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Elang Mahkota and Bayan Resources
The main advantage of trading using opposite Elang Mahkota and Bayan Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Elang Mahkota position performs unexpectedly, Bayan Resources 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 Bayan Resources will offset losses from the drop in Bayan Resources' long position.| Elang Mahkota vs. Mnc Land Tbk | Elang Mahkota vs. MNC Vision Networks | Elang Mahkota vs. MD Pictures Tbk | Elang Mahkota vs. Link Net Tbk |
| Bayan Resources vs. Harum Energy Tbk | Bayan Resources vs. Delta Dunia Makmur | Bayan Resources vs. Adi Sarana Armada | Bayan Resources vs. Elang Mahkota Teknologi |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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