Correlation Between Kirana Megatara and Bakrie Brothers
Can any of the company-specific risk be diversified away by investing in both Kirana Megatara and Bakrie Brothers 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 Kirana Megatara and Bakrie Brothers into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kirana Megatara Tbk and Bakrie Brothers Tbk, you can compare the effects of market volatilities on Kirana Megatara and Bakrie Brothers 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 Kirana Megatara with a short position of Bakrie Brothers. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kirana Megatara and Bakrie Brothers.
Diversification Opportunities for Kirana Megatara and Bakrie Brothers
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Kirana and Bakrie is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Kirana Megatara Tbk and Bakrie Brothers Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bakrie Brothers Tbk and Kirana Megatara 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 Kirana Megatara Tbk are associated (or correlated) with Bakrie Brothers. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bakrie Brothers Tbk has no effect on the direction of Kirana Megatara i.e., Kirana Megatara and Bakrie Brothers go up and down completely randomly.
Pair Corralation between Kirana Megatara and Bakrie Brothers
Assuming the 90 days trading horizon Kirana Megatara Tbk is expected to generate 1.14 times more return on investment than Bakrie Brothers. However, Kirana Megatara is 1.14 times more volatile than Bakrie Brothers Tbk. It trades about 0.04 of its potential returns per unit of risk. Bakrie Brothers Tbk is currently generating about -0.01 per unit of risk. If you would invest 24,800 in Kirana Megatara Tbk on August 31, 2024 and sell it today you would earn a total of 8,000 from holding Kirana Megatara Tbk or generate 32.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.72% |
| Values | Daily Returns |
Kirana Megatara Tbk vs. Bakrie Brothers Tbk
Performance |
| Timeline |
| Kirana Megatara Tbk |
| Bakrie Brothers Tbk |
Kirana Megatara and Bakrie Brothers Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kirana Megatara and Bakrie Brothers
The main advantage of trading using opposite Kirana Megatara and Bakrie Brothers positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kirana Megatara position performs unexpectedly, Bakrie Brothers 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 Bakrie Brothers will offset losses from the drop in Bakrie Brothers' long position.| Kirana Megatara vs. Emdeki Utama Tbk | Kirana Megatara vs. Panca Budi Idaman | Kirana Megatara vs. Mark Dynamics Indonesia | Kirana Megatara vs. Map Boga Adiperkasa |
| Bakrie Brothers vs. Bakrieland Development Tbk | Bakrie Brothers vs. Bakrie Sumatera Plantations | Bakrie Brothers vs. Energi Mega Persada | Bakrie Brothers vs. Darma Henwa Tbk |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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