Correlation Between LB Foster and Bukit Asam
Can any of the company-specific risk be diversified away by investing in both LB Foster 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 LB Foster and Bukit Asam into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LB Foster and Bukit Asam Tbk, you can compare the effects of market volatilities on LB Foster 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 LB Foster with a short position of Bukit Asam. Check out your portfolio center. Please also check ongoing floating volatility patterns of LB Foster and Bukit Asam.
Diversification Opportunities for LB Foster and Bukit Asam
-0.02 | Correlation Coefficient |
Good diversification
The 3 months correlation between FSTR and Bukit is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding LB Foster 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 LB Foster 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 LB Foster 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 LB Foster i.e., LB Foster and Bukit Asam go up and down completely randomly.
Pair Corralation between LB Foster and Bukit Asam
Given the investment horizon of 90 days LB Foster is expected to generate 0.93 times more return on investment than Bukit Asam. However, LB Foster is 1.08 times less risky than Bukit Asam. It trades about 0.1 of its potential returns per unit of risk. Bukit Asam Tbk is currently generating about -0.01 per unit of risk. If you would invest 2,008 in LB Foster on November 28, 2024 and sell it today you would earn a total of 636.00 from holding LB Foster or generate 31.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
LB Foster vs. Bukit Asam Tbk
Performance |
| Timeline |
| LB Foster |
| Bukit Asam Tbk |
LB Foster and Bukit Asam Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LB Foster and Bukit Asam
The main advantage of trading using opposite LB Foster and Bukit Asam positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LB Foster 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.| LB Foster vs. Trinity Industries | LB Foster vs. Freightcar America | LB Foster vs. Westinghouse Air Brake | LB Foster vs. Norfolk Southern |
| Bukit Asam vs. Astral Foods Limited | Bukit Asam vs. Aegon NV ADR | Bukit Asam vs. Apartment Investment and | Bukit Asam vs. WK Kellogg Co |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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