Correlation Between Bukit Asam and Timah Persero
Can any of the company-specific risk be diversified away by investing in both Bukit Asam and Timah Persero 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 Timah Persero 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 Timah Persero Tbk, you can compare the effects of market volatilities on Bukit Asam and Timah Persero 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 Timah Persero. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bukit Asam and Timah Persero.
Diversification Opportunities for Bukit Asam and Timah Persero
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Bukit and Timah is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Bukit Asam Tbk and Timah Persero Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Timah Persero 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 Timah Persero. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Timah Persero Tbk has no effect on the direction of Bukit Asam i.e., Bukit Asam and Timah Persero go up and down completely randomly.
Pair Corralation between Bukit Asam and Timah Persero
Assuming the 90 days trading horizon Bukit Asam Tbk is expected to generate 0.73 times more return on investment than Timah Persero. However, Bukit Asam Tbk is 1.36 times less risky than Timah Persero. It trades about 0.04 of its potential returns per unit of risk. Timah Persero Tbk is currently generating about 0.02 per unit of risk. If you would invest 208,787 in Bukit Asam Tbk on August 28, 2024 and sell it today you would earn a total of 72,213 from holding Bukit Asam Tbk or generate 34.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.78% |
| Values | Daily Returns |
Bukit Asam Tbk vs. Timah Persero Tbk
Performance |
| Timeline |
| Bukit Asam Tbk |
| Timah Persero Tbk |
Bukit Asam and Timah Persero Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bukit Asam and Timah Persero
The main advantage of trading using opposite Bukit Asam and Timah Persero positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bukit Asam position performs unexpectedly, Timah Persero 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 Timah Persero will offset losses from the drop in Timah Persero's long position.The idea behind Bukit Asam Tbk and Timah Persero Tbk pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Timah Persero vs. Vale Indonesia Tbk | Timah Persero vs. Aneka Tambang Persero | Timah Persero vs. Bukit Asam Tbk | Timah Persero vs. Perusahaan Gas Negara |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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