Correlation Between Bima Sakti and Royalindo Investa
Can any of the company-specific risk be diversified away by investing in both Bima Sakti and Royalindo Investa 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 Royalindo Investa 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 Royalindo Investa Wijaya, you can compare the effects of market volatilities on Bima Sakti and Royalindo Investa 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 Royalindo Investa. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bima Sakti and Royalindo Investa.
Diversification Opportunities for Bima Sakti and Royalindo Investa
0.12 | Correlation Coefficient |
Average diversification
The 3 months correlation between Bima and Royalindo is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Bima Sakti Pertiwi and Royalindo Investa Wijaya in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Royalindo Investa Wijaya 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 Royalindo Investa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Royalindo Investa Wijaya has no effect on the direction of Bima Sakti i.e., Bima Sakti and Royalindo Investa go up and down completely randomly.
Pair Corralation between Bima Sakti and Royalindo Investa
Assuming the 90 days trading horizon Bima Sakti is expected to generate 10.12 times less return on investment than Royalindo Investa. But when comparing it to its historical volatility, Bima Sakti Pertiwi is 5.88 times less risky than Royalindo Investa. It trades about 0.07 of its potential returns per unit of risk. Royalindo Investa Wijaya is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 11,600 in Royalindo Investa Wijaya on November 3, 2024 and sell it today you would earn a total of 1,900 from holding Royalindo Investa Wijaya or generate 16.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bima Sakti Pertiwi vs. Royalindo Investa Wijaya
Performance |
| Timeline |
| Bima Sakti Pertiwi |
| Royalindo Investa Wijaya |
Bima Sakti and Royalindo Investa Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bima Sakti and Royalindo Investa
The main advantage of trading using opposite Bima Sakti and Royalindo Investa positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bima Sakti position performs unexpectedly, Royalindo Investa 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 Royalindo Investa will offset losses from the drop in Royalindo Investa's long position.| Bima Sakti vs. Hotel Sahid Jaya | Bima Sakti vs. Surya Citra Media | Bima Sakti vs. PT Homeco Victoria | Bima Sakti vs. Indosterling Technomedia Tbk |
| Royalindo Investa vs. Andalan Sakti Primaindo | Royalindo Investa vs. Bumi Benowo Sukses | Royalindo Investa vs. Bima Sakti Pertiwi | Royalindo Investa vs. Agro Yasa Lestari |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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