Correlation Between Buyung Poetra and Erajaya Swasembada
Can any of the company-specific risk be diversified away by investing in both Buyung Poetra and Erajaya Swasembada 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 Buyung Poetra and Erajaya Swasembada into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Buyung Poetra Sembada and Erajaya Swasembada Tbk, you can compare the effects of market volatilities on Buyung Poetra and Erajaya Swasembada 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 Buyung Poetra with a short position of Erajaya Swasembada. Check out your portfolio center. Please also check ongoing floating volatility patterns of Buyung Poetra and Erajaya Swasembada.
Diversification Opportunities for Buyung Poetra and Erajaya Swasembada
0.08 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Buyung and Erajaya is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Buyung Poetra Sembada and Erajaya Swasembada Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Erajaya Swasembada Tbk and Buyung Poetra 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 Buyung Poetra Sembada are associated (or correlated) with Erajaya Swasembada. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Erajaya Swasembada Tbk has no effect on the direction of Buyung Poetra i.e., Buyung Poetra and Erajaya Swasembada go up and down completely randomly.
Pair Corralation between Buyung Poetra and Erajaya Swasembada
Assuming the 90 days trading horizon Buyung Poetra Sembada is expected to under-perform the Erajaya Swasembada. In addition to that, Buyung Poetra is 1.2 times more volatile than Erajaya Swasembada Tbk. It trades about -0.04 of its total potential returns per unit of risk. Erajaya Swasembada Tbk is currently generating about 0.02 per unit of volatility. If you would invest 40,753 in Erajaya Swasembada Tbk on August 25, 2024 and sell it today you would earn a total of 1,847 from holding Erajaya Swasembada Tbk or generate 4.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Buyung Poetra Sembada vs. Erajaya Swasembada Tbk
Performance |
| Timeline |
| Buyung Poetra Sembada |
| Erajaya Swasembada Tbk |
Buyung Poetra and Erajaya Swasembada Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Buyung Poetra and Erajaya Swasembada
The main advantage of trading using opposite Buyung Poetra and Erajaya Swasembada positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Buyung Poetra position performs unexpectedly, Erajaya Swasembada 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 Erajaya Swasembada will offset losses from the drop in Erajaya Swasembada's long position.| Buyung Poetra vs. Charoen Pokphand Indonesia | Buyung Poetra vs. Kalbe Farma Tbk | Buyung Poetra vs. Indofood Cbp Sukses | Buyung Poetra vs. Akr Corporindo Tbk |
| Erajaya Swasembada vs. Multipolar Tbk | Erajaya Swasembada vs. Astra Graphia Tbk | Erajaya Swasembada vs. Matahari Putra Prima | Erajaya Swasembada vs. Ramayana Lestari Sentosa |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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