Correlation Between Bima Sakti and Equity Development
Can any of the company-specific risk be diversified away by investing in both Bima Sakti and Equity Development 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 Bima Sakti and Equity Development into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bima Sakti Pertiwi and Equity Development Investment, you can compare the effects of market volatilities on Bima Sakti and Equity Development 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 Bima Sakti with a short position of Equity Development. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bima Sakti and Equity Development.
Diversification Opportunities for Bima Sakti and Equity Development
0.21 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Bima and Equity is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Bima Sakti Pertiwi and Equity Development Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Equity Development and Bima Sakti 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 Bima Sakti Pertiwi are associated (or correlated) with Equity Development. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Equity Development has no effect on the direction of Bima Sakti i.e., Bima Sakti and Equity Development go up and down completely randomly.
Pair Corralation between Bima Sakti and Equity Development
Assuming the 90 days trading horizon Bima Sakti Pertiwi is expected to generate 1.79 times more return on investment than Equity Development. However, Bima Sakti is 1.79 times more volatile than Equity Development Investment. It trades about 0.0 of its potential returns per unit of risk. Equity Development Investment is currently generating about -0.02 per unit of risk. If you would invest 7,300 in Bima Sakti Pertiwi on August 29, 2024 and sell it today you would lose (2,200) from holding Bima Sakti Pertiwi or give up 30.14% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.79% |
| Values | Daily Returns |
Bima Sakti Pertiwi vs. Equity Development Investment
Performance |
| Timeline |
| Bima Sakti Pertiwi |
| Equity Development |
Bima Sakti and Equity Development Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bima Sakti and Equity Development
The main advantage of trading using opposite Bima Sakti and Equity Development positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bima Sakti position performs unexpectedly, Equity Development 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 Equity Development will offset losses from the drop in Equity Development's long position.| Bima Sakti vs. Indo Acidatama Tbk | Bima Sakti vs. Indorama Synthetics Tbk | Bima Sakti vs. PT UBC Medical | Bima Sakti vs. Capital Financial Indonesia |
| Equity Development vs. Pacific Strategic Financial | Equity Development vs. Asuransi Harta Aman | Equity Development vs. Buana Finance Tbk | Equity Development vs. Asuransi Bintang 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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