Correlation Between Bima Sakti and Lancartama Sejati
Can any of the company-specific risk be diversified away by investing in both Bima Sakti and Lancartama Sejati 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 Lancartama Sejati 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 Lancartama Sejati Tbk, you can compare the effects of market volatilities on Bima Sakti and Lancartama Sejati 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 Lancartama Sejati. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bima Sakti and Lancartama Sejati.
Diversification Opportunities for Bima Sakti and Lancartama Sejati
-0.11 | Correlation Coefficient |
Good diversification
The 3 months correlation between Bima and Lancartama is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Bima Sakti Pertiwi and Lancartama Sejati Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lancartama Sejati Tbk 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 Lancartama Sejati. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lancartama Sejati Tbk has no effect on the direction of Bima Sakti i.e., Bima Sakti and Lancartama Sejati go up and down completely randomly.
Pair Corralation between Bima Sakti and Lancartama Sejati
Assuming the 90 days trading horizon Bima Sakti Pertiwi is expected to generate 0.89 times more return on investment than Lancartama Sejati. However, Bima Sakti Pertiwi is 1.12 times less risky than Lancartama Sejati. It trades about 0.01 of its potential returns per unit of risk. Lancartama Sejati Tbk is currently generating about -0.03 per unit of risk. If you would invest 6,100 in Bima Sakti Pertiwi on September 12, 2024 and sell it today you would lose (1,000.00) from holding Bima Sakti Pertiwi or give up 16.39% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bima Sakti Pertiwi vs. Lancartama Sejati Tbk
Performance |
| Timeline |
| Bima Sakti Pertiwi |
| Lancartama Sejati Tbk |
Bima Sakti and Lancartama Sejati Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bima Sakti and Lancartama Sejati
The main advantage of trading using opposite Bima Sakti and Lancartama Sejati positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bima Sakti position performs unexpectedly, Lancartama Sejati 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 Lancartama Sejati will offset losses from the drop in Lancartama Sejati's long position.| Bima Sakti vs. Optima Prima Metal | Bima Sakti vs. Lion Metal Works | Bima Sakti vs. Lotte Chemical Titan | Bima Sakti vs. Humpuss Intermoda Transportasi |
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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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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