Correlation Between Richardson Electronics and PT Bayan
Can any of the company-specific risk be diversified away by investing in both Richardson Electronics and PT Bayan 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 Richardson Electronics and PT Bayan into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Richardson Electronics and PT Bayan Resources, you can compare the effects of market volatilities on Richardson Electronics and PT Bayan 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 Richardson Electronics with a short position of PT Bayan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Richardson Electronics and PT Bayan.
Diversification Opportunities for Richardson Electronics and PT Bayan
0.32 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Richardson and BNB is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Richardson Electronics and PT Bayan Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PT Bayan Resources and Richardson Electronics 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 Richardson Electronics are associated (or correlated) with PT Bayan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PT Bayan Resources has no effect on the direction of Richardson Electronics i.e., Richardson Electronics and PT Bayan go up and down completely randomly.
Pair Corralation between Richardson Electronics and PT Bayan
Assuming the 90 days horizon Richardson Electronics is expected to generate 1.33 times more return on investment than PT Bayan. However, Richardson Electronics is 1.33 times more volatile than PT Bayan Resources. It trades about -0.05 of its potential returns per unit of risk. PT Bayan Resources is currently generating about -0.17 per unit of risk. If you would invest 1,302 in Richardson Electronics on November 30, 2024 and sell it today you would lose (77.00) from holding Richardson Electronics or give up 5.91% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Richardson Electronics vs. PT Bayan Resources
Performance |
| Timeline |
| Richardson Electronics |
| PT Bayan Resources |
Richardson Electronics and PT Bayan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Richardson Electronics and PT Bayan
The main advantage of trading using opposite Richardson Electronics and PT Bayan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Richardson Electronics position performs unexpectedly, PT Bayan 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 PT Bayan will offset losses from the drop in PT Bayan's long position.| Richardson Electronics vs. Alliance Data Systems | Richardson Electronics vs. CEOTRONICS | Richardson Electronics vs. Stewart Information Services | Richardson Electronics vs. Northern Data AG |
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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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