Correlation Between Kencana Energi and Bintang Oto
Can any of the company-specific risk be diversified away by investing in both Kencana Energi and Bintang Oto 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 Kencana Energi and Bintang Oto into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kencana Energi Lestari and Bintang Oto Global, you can compare the effects of market volatilities on Kencana Energi and Bintang Oto 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 Kencana Energi with a short position of Bintang Oto. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kencana Energi and Bintang Oto.
Diversification Opportunities for Kencana Energi and Bintang Oto
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Kencana and Bintang is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Kencana Energi Lestari and Bintang Oto Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bintang Oto Global and Kencana Energi 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 Kencana Energi Lestari are associated (or correlated) with Bintang Oto. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bintang Oto Global has no effect on the direction of Kencana Energi i.e., Kencana Energi and Bintang Oto go up and down completely randomly.
Pair Corralation between Kencana Energi and Bintang Oto
Assuming the 90 days trading horizon Kencana Energi Lestari is expected to generate 1.11 times more return on investment than Bintang Oto. However, Kencana Energi is 1.11 times more volatile than Bintang Oto Global. It trades about 0.0 of its potential returns per unit of risk. Bintang Oto Global is currently generating about -0.09 per unit of risk. If you would invest 68,635 in Kencana Energi Lestari on September 1, 2024 and sell it today you would lose (5,135) from holding Kencana Energi Lestari or give up 7.48% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kencana Energi Lestari vs. Bintang Oto Global
Performance |
| Timeline |
| Kencana Energi Lestari |
| Bintang Oto Global |
Kencana Energi and Bintang Oto Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kencana Energi and Bintang Oto
The main advantage of trading using opposite Kencana Energi and Bintang Oto positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kencana Energi position performs unexpectedly, Bintang Oto 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 Bintang Oto will offset losses from the drop in Bintang Oto's long position.| Kencana Energi vs. PT Indonesia Kendaraan | Kencana Energi vs. Cikarang Listrindo Tbk | Kencana Energi vs. Jasa Armada Indonesia | Kencana Energi vs. Pelita Samudera Shipping |
| Bintang Oto vs. Japfa Comfeed Indonesia | Bintang Oto vs. Charoen Pokphand Indonesia | Bintang Oto vs. Erajaya Swasembada Tbk | Bintang Oto vs. Indofood Cbp Sukses |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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