Correlation Between Equity Development and Buana Finance
Can any of the company-specific risk be diversified away by investing in both Equity Development and Buana Finance 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 Equity Development and Buana Finance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Equity Development Investment and Buana Finance Tbk, you can compare the effects of market volatilities on Equity Development and Buana Finance 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 Equity Development with a short position of Buana Finance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Equity Development and Buana Finance.
Diversification Opportunities for Equity Development and Buana Finance
0.37 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Equity and Buana is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Equity Development Investment and Buana Finance Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Buana Finance Tbk and Equity 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 Equity Development Investment are associated (or correlated) with Buana Finance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Buana Finance Tbk has no effect on the direction of Equity Development i.e., Equity Development and Buana Finance go up and down completely randomly.
Pair Corralation between Equity Development and Buana Finance
Assuming the 90 days trading horizon Equity Development is expected to generate 6.23 times less return on investment than Buana Finance. But when comparing it to its historical volatility, Equity Development Investment is 1.42 times less risky than Buana Finance. It trades about 0.0 of its potential returns per unit of risk. Buana Finance Tbk is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 69,175 in Buana Finance Tbk on September 2, 2024 and sell it today you would lose (2,675) from holding Buana Finance Tbk or give up 3.87% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Equity Development Investment vs. Buana Finance Tbk
Performance |
| Timeline |
| Equity Development |
| Buana Finance Tbk |
Equity Development and Buana Finance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Equity Development and Buana Finance
The main advantage of trading using opposite Equity Development and Buana Finance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Equity Development position performs unexpectedly, Buana Finance 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 Finance will offset losses from the drop in Buana Finance's long position.| Equity Development vs. Pacific Strategic Financial | Equity Development vs. Asuransi Harta Aman | Equity Development vs. Buana Finance Tbk | Equity Development vs. Asuransi Bintang Tbk |
| Buana Finance vs. Asuransi Ramayana Tbk | Buana Finance vs. Clipan Finance Indonesia | Buana Finance vs. Asuransi Bintang Tbk | Buana Finance vs. Asuransi Dayin Mitra |
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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