Correlation Between Bukit Asam and TerraCom
Can any of the company-specific risk be diversified away by investing in both Bukit Asam and TerraCom 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 TerraCom 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 TerraCom Limited, you can compare the effects of market volatilities on Bukit Asam and TerraCom 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 TerraCom. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bukit Asam and TerraCom.
Diversification Opportunities for Bukit Asam and TerraCom
-0.17 | Correlation Coefficient |
Good diversification
The 3 months correlation between Bukit and TerraCom is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Bukit Asam Tbk and TerraCom Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TerraCom Limited 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 TerraCom. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TerraCom Limited has no effect on the direction of Bukit Asam i.e., Bukit Asam and TerraCom go up and down completely randomly.
Pair Corralation between Bukit Asam and TerraCom
Assuming the 90 days horizon Bukit Asam Tbk is expected to generate 0.15 times more return on investment than TerraCom. However, Bukit Asam Tbk is 6.68 times less risky than TerraCom. It trades about 0.26 of its potential returns per unit of risk. TerraCom Limited is currently generating about -0.45 per unit of risk. If you would invest 406.00 in Bukit Asam Tbk on November 2, 2024 and sell it today you would earn a total of 19.00 from holding Bukit Asam Tbk or generate 4.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 26.32% |
| Values | Daily Returns |
Bukit Asam Tbk vs. TerraCom Limited
Performance |
| Timeline |
| Bukit Asam Tbk |
| TerraCom Limited |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Insignificant
Bukit Asam and TerraCom Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bukit Asam and TerraCom
The main advantage of trading using opposite Bukit Asam and TerraCom positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bukit Asam position performs unexpectedly, TerraCom 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 TerraCom will offset losses from the drop in TerraCom's long position.| Bukit Asam vs. InfuSystems Holdings | Bukit Asam vs. Office Properties Income | Bukit Asam vs. Envista Holdings Corp | Bukit Asam vs. Haemonetics |
| TerraCom vs. Indo Tambangraya Megah | TerraCom vs. Adaro Energy Tbk | TerraCom vs. Thungela Resources Limited | TerraCom vs. China Coal Energy |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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