Correlation Between New HopeLtd and Bukit Asam
Can any of the company-specific risk be diversified away by investing in both New HopeLtd 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 New HopeLtd and Bukit Asam into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between New Hope and Bukit Asam Tbk, you can compare the effects of market volatilities on New HopeLtd 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 New HopeLtd with a short position of Bukit Asam. Check out your portfolio center. Please also check ongoing floating volatility patterns of New HopeLtd and Bukit Asam.
Diversification Opportunities for New HopeLtd and Bukit Asam
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between New and Bukit is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding New Hope 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 New HopeLtd 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 New Hope 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 New HopeLtd i.e., New HopeLtd and Bukit Asam go up and down completely randomly.
Pair Corralation between New HopeLtd and Bukit Asam
Assuming the 90 days horizon New HopeLtd is expected to generate 1.04 times less return on investment than Bukit Asam. In addition to that, New HopeLtd is 1.98 times more volatile than Bukit Asam Tbk. It trades about 0.04 of its total potential returns per unit of risk. Bukit Asam Tbk is currently generating about 0.08 per unit of volatility. If you would invest 319.00 in Bukit Asam Tbk on September 1, 2024 and sell it today you would earn a total of 150.00 from holding Bukit Asam Tbk or generate 47.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 79.35% |
| Values | Daily Returns |
New Hope vs. Bukit Asam Tbk
Performance |
| Timeline |
| New HopeLtd |
| Bukit Asam Tbk |
New HopeLtd and Bukit Asam Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with New HopeLtd and Bukit Asam
The main advantage of trading using opposite New HopeLtd and Bukit Asam positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if New HopeLtd 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.| New HopeLtd vs. Indo Tambangraya Megah | New HopeLtd vs. Thungela Resources Limited | New HopeLtd vs. Geo Energy Resources |
| Bukit Asam vs. Indo Tambangraya Megah | Bukit Asam vs. Thungela Resources Limited | Bukit Asam vs. Geo Energy Resources |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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