Correlation Between Tower Bersama and BFI Finance

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Can any of the company-specific risk be diversified away by investing in both Tower Bersama and BFI Finance 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 Tower Bersama and BFI Finance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tower Bersama Infrastructure and BFI Finance Indonesia, you can compare the effects of market volatilities on Tower Bersama and BFI Finance 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 Tower Bersama with a short position of BFI Finance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tower Bersama and BFI Finance.

Diversification Opportunities for Tower Bersama and BFI Finance

-0.03
  Correlation Coefficient

Good diversification

The 3 months correlation between Tower and BFI is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Tower Bersama Infrastructure and BFI Finance Indonesia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BFI Finance Indonesia and Tower Bersama 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 Tower Bersama Infrastructure are associated (or correlated) with BFI Finance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BFI Finance Indonesia has no effect on the direction of Tower Bersama i.e., Tower Bersama and BFI Finance go up and down completely randomly.

Pair Corralation between Tower Bersama and BFI Finance

Assuming the 90 days trading horizon Tower Bersama is expected to generate 3.8 times less return on investment than BFI Finance. But when comparing it to its historical volatility, Tower Bersama Infrastructure is 1.36 times less risky than BFI Finance. It trades about 0.0 of its potential returns per unit of risk. BFI Finance Indonesia is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  103,813  in BFI Finance Indonesia on August 31, 2024 and sell it today you would lose (10,813) from holding BFI Finance Indonesia or give up 10.42% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy99.78%
ValuesDaily Returns

Tower Bersama Infrastructure  vs.  BFI Finance Indonesia

 Performance 
       Timeline  
Tower Bersama Infras 

Risk-Adjusted Performance

1 of 100

 
Weak
 
Strong
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in Tower Bersama Infrastructure are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent forward-looking signals, Tower Bersama is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.
BFI Finance Indonesia 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days BFI Finance Indonesia has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's forward-looking signals remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Tower Bersama and BFI Finance Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Tower Bersama and BFI Finance

The main advantage of trading using opposite Tower Bersama and BFI Finance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tower Bersama position performs unexpectedly, BFI Finance 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 BFI Finance will offset losses from the drop in BFI Finance's long position.
The idea behind Tower Bersama Infrastructure and BFI Finance Indonesia 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.
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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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.

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