Correlation Between Bukit Asam and Perusahaan Perkebunan
Can any of the company-specific risk be diversified away by investing in both Bukit Asam and Perusahaan Perkebunan 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 Perusahaan Perkebunan 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 Perusahaan Perkebunan London, you can compare the effects of market volatilities on Bukit Asam and Perusahaan Perkebunan 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 Perusahaan Perkebunan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bukit Asam and Perusahaan Perkebunan.
Diversification Opportunities for Bukit Asam and Perusahaan Perkebunan
0.15 | Correlation Coefficient |
Average diversification
The 3 months correlation between Bukit and Perusahaan is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Bukit Asam Tbk and Perusahaan Perkebunan London in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Perusahaan Perkebunan 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 Perusahaan Perkebunan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Perusahaan Perkebunan has no effect on the direction of Bukit Asam i.e., Bukit Asam and Perusahaan Perkebunan go up and down completely randomly.
Pair Corralation between Bukit Asam and Perusahaan Perkebunan
Assuming the 90 days trading horizon Bukit Asam Tbk is expected to generate 0.61 times more return on investment than Perusahaan Perkebunan. However, Bukit Asam Tbk is 1.63 times less risky than Perusahaan Perkebunan. It trades about -0.07 of its potential returns per unit of risk. Perusahaan Perkebunan London is currently generating about -0.29 per unit of risk. If you would invest 285,000 in Bukit Asam Tbk on August 30, 2024 and sell it today you would lose (8,000) from holding Bukit Asam Tbk or give up 2.81% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bukit Asam Tbk vs. Perusahaan Perkebunan London
Performance |
| Timeline |
| Bukit Asam Tbk |
| Perusahaan Perkebunan |
Bukit Asam and Perusahaan Perkebunan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bukit Asam and Perusahaan Perkebunan
The main advantage of trading using opposite Bukit Asam and Perusahaan Perkebunan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bukit Asam position performs unexpectedly, Perusahaan Perkebunan 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 Perusahaan Perkebunan will offset losses from the drop in Perusahaan Perkebunan'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 |
| Perusahaan Perkebunan vs. Astra Agro Lestari | Perusahaan Perkebunan vs. Vale Indonesia Tbk | Perusahaan Perkebunan vs. Timah Persero Tbk | Perusahaan Perkebunan vs. United Tractors 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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