Correlation Between Smartfren Telecom and Buana Listya
Can any of the company-specific risk be diversified away by investing in both Smartfren Telecom and Buana Listya 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 Smartfren Telecom and Buana Listya into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Smartfren Telecom Tbk and Buana Listya Tama, you can compare the effects of market volatilities on Smartfren Telecom and Buana Listya 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 Smartfren Telecom with a short position of Buana Listya. Check out your portfolio center. Please also check ongoing floating volatility patterns of Smartfren Telecom and Buana Listya.
Diversification Opportunities for Smartfren Telecom and Buana Listya
-0.07 | Correlation Coefficient |
Good diversification
The 3 months correlation between Smartfren and Buana is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Smartfren Telecom Tbk and Buana Listya Tama in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Buana Listya Tama and Smartfren Telecom 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 Smartfren Telecom Tbk are associated (or correlated) with Buana Listya. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Buana Listya Tama has no effect on the direction of Smartfren Telecom i.e., Smartfren Telecom and Buana Listya go up and down completely randomly.
Pair Corralation between Smartfren Telecom and Buana Listya
Assuming the 90 days trading horizon Smartfren Telecom is expected to generate 1.51 times less return on investment than Buana Listya. In addition to that, Smartfren Telecom is 1.19 times more volatile than Buana Listya Tama. It trades about 0.19 of its total potential returns per unit of risk. Buana Listya Tama is currently generating about 0.35 per unit of volatility. If you would invest 12,400 in Buana Listya Tama on November 3, 2024 and sell it today you would earn a total of 1,800 from holding Buana Listya Tama or generate 14.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Smartfren Telecom Tbk vs. Buana Listya Tama
Performance |
| Timeline |
| Smartfren Telecom Tbk |
| Buana Listya Tama |
Smartfren Telecom and Buana Listya Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Smartfren Telecom and Buana Listya
The main advantage of trading using opposite Smartfren Telecom and Buana Listya positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Smartfren Telecom position performs unexpectedly, Buana Listya 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 Buana Listya will offset losses from the drop in Buana Listya's long position.| Smartfren Telecom vs. Indosat Tbk | Smartfren Telecom vs. XL Axiata Tbk | Smartfren Telecom vs. Energi Mega Persada | Smartfren Telecom vs. Bakrie Brothers Tbk |
| Buana Listya vs. Sentra Food Indonesia | Buana Listya vs. Capital Financial Indonesia | Buana Listya vs. Global Mediacom Tbk | Buana Listya vs. Dyandra Media International |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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