Correlation Between Indo Oil and Bhuwanatala Indah
Can any of the company-specific risk be diversified away by investing in both Indo Oil and Bhuwanatala Indah 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 Indo Oil and Bhuwanatala Indah into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Indo Oil Perkasa and Bhuwanatala Indah Permai, you can compare the effects of market volatilities on Indo Oil and Bhuwanatala Indah 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 Indo Oil with a short position of Bhuwanatala Indah. Check out your portfolio center. Please also check ongoing floating volatility patterns of Indo Oil and Bhuwanatala Indah.
Diversification Opportunities for Indo Oil and Bhuwanatala Indah
-0.3 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Indo and Bhuwanatala is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Indo Oil Perkasa and Bhuwanatala Indah Permai in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bhuwanatala Indah Permai and Indo Oil 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 Indo Oil Perkasa are associated (or correlated) with Bhuwanatala Indah. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bhuwanatala Indah Permai has no effect on the direction of Indo Oil i.e., Indo Oil and Bhuwanatala Indah go up and down completely randomly.
Pair Corralation between Indo Oil and Bhuwanatala Indah
Assuming the 90 days trading horizon Indo Oil is expected to generate 1.41 times less return on investment than Bhuwanatala Indah. But when comparing it to its historical volatility, Indo Oil Perkasa is 1.09 times less risky than Bhuwanatala Indah. It trades about 0.05 of its potential returns per unit of risk. Bhuwanatala Indah Permai is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 2,400 in Bhuwanatala Indah Permai on November 28, 2024 and sell it today you would earn a total of 800.00 from holding Bhuwanatala Indah Permai or generate 33.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Indo Oil Perkasa vs. Bhuwanatala Indah Permai
Performance |
| Timeline |
| Indo Oil Perkasa |
| Bhuwanatala Indah Permai |
Indo Oil and Bhuwanatala Indah Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Indo Oil and Bhuwanatala Indah
The main advantage of trading using opposite Indo Oil and Bhuwanatala Indah positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Indo Oil position performs unexpectedly, Bhuwanatala Indah 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 Bhuwanatala Indah will offset losses from the drop in Bhuwanatala Indah's long position.| Indo Oil vs. Envy Technologies Indonesia | Indo Oil vs. Inocycle Technology Tbk | Indo Oil vs. Hoffmen Cleanindo | Indo Oil vs. Eastparc Hotel Tbk |
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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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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