Correlation Between Bukit Asam and Erajaya Swasembada
Can any of the company-specific risk be diversified away by investing in both Bukit Asam and Erajaya Swasembada 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 Bukit Asam and Erajaya Swasembada into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bukit Asam Tbk and Erajaya Swasembada Tbk, you can compare the effects of market volatilities on Bukit Asam and Erajaya Swasembada 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 Bukit Asam with a short position of Erajaya Swasembada. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bukit Asam and Erajaya Swasembada.
Diversification Opportunities for Bukit Asam and Erajaya Swasembada
0.43 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Bukit and Erajaya is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Bukit Asam Tbk and Erajaya Swasembada Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Erajaya Swasembada Tbk and Bukit Asam 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 Bukit Asam Tbk are associated (or correlated) with Erajaya Swasembada. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Erajaya Swasembada Tbk has no effect on the direction of Bukit Asam i.e., Bukit Asam and Erajaya Swasembada go up and down completely randomly.
Pair Corralation between Bukit Asam and Erajaya Swasembada
Assuming the 90 days trading horizon Bukit Asam Tbk is expected to generate 0.81 times more return on investment than Erajaya Swasembada. However, Bukit Asam Tbk is 1.24 times less risky than Erajaya Swasembada. It trades about 0.02 of its potential returns per unit of risk. Erajaya Swasembada Tbk is currently generating about -0.01 per unit of risk. If you would invest 241,049 in Bukit Asam Tbk on November 27, 2024 and sell it today you would earn a total of 21,951 from holding Bukit Asam Tbk or generate 9.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.78% |
| Values | Daily Returns |
Bukit Asam Tbk vs. Erajaya Swasembada Tbk
Performance |
| Timeline |
| Bukit Asam Tbk |
| Erajaya Swasembada Tbk |
Bukit Asam and Erajaya Swasembada Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bukit Asam and Erajaya Swasembada
The main advantage of trading using opposite Bukit Asam and Erajaya Swasembada positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bukit Asam position performs unexpectedly, Erajaya Swasembada 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 Erajaya Swasembada will offset losses from the drop in Erajaya Swasembada's long position.| Bukit Asam vs. Perusahaan Gas Negara | Bukit Asam vs. Indo Tambangraya Megah | Bukit Asam vs. Aneka Tambang Persero | Bukit Asam vs. Adaro Energy Tbk |
| Erajaya Swasembada vs. Ace Hardware Indonesia | Erajaya Swasembada vs. Japfa Comfeed Indonesia | Erajaya Swasembada vs. XL Axiata Tbk | Erajaya Swasembada vs. Pembangunan Perumahan PT |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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