Correlation Between Transcoal Pacific and Bhuwanatala Indah
Can any of the company-specific risk be diversified away by investing in both Transcoal Pacific and Bhuwanatala Indah 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 Transcoal Pacific and Bhuwanatala Indah into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Transcoal Pacific Tbk and Bhuwanatala Indah Permai, you can compare the effects of market volatilities on Transcoal Pacific and Bhuwanatala Indah 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 Transcoal Pacific with a short position of Bhuwanatala Indah. Check out your portfolio center. Please also check ongoing floating volatility patterns of Transcoal Pacific and Bhuwanatala Indah.
Diversification Opportunities for Transcoal Pacific and Bhuwanatala Indah
-0.36 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Transcoal and Bhuwanatala is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Transcoal Pacific Tbk and Bhuwanatala Indah Permai in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bhuwanatala Indah Permai and Transcoal Pacific 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 Transcoal Pacific Tbk are associated (or correlated) with Bhuwanatala Indah. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bhuwanatala Indah Permai has no effect on the direction of Transcoal Pacific i.e., Transcoal Pacific and Bhuwanatala Indah go up and down completely randomly.
Pair Corralation between Transcoal Pacific and Bhuwanatala Indah
Assuming the 90 days trading horizon Transcoal Pacific Tbk is expected to generate 0.27 times more return on investment than Bhuwanatala Indah. However, Transcoal Pacific Tbk is 3.72 times less risky than Bhuwanatala Indah. It trades about 0.47 of its potential returns per unit of risk. Bhuwanatala Indah Permai is currently generating about -0.32 per unit of risk. If you would invest 645,000 in Transcoal Pacific Tbk on November 28, 2024 and sell it today you would earn a total of 55,000 from holding Transcoal Pacific Tbk or generate 8.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Transcoal Pacific Tbk vs. Bhuwanatala Indah Permai
Performance |
| Timeline |
| Transcoal Pacific Tbk |
| Bhuwanatala Indah Permai |
Transcoal Pacific and Bhuwanatala Indah Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Transcoal Pacific and Bhuwanatala Indah
The main advantage of trading using opposite Transcoal Pacific and Bhuwanatala Indah positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Transcoal Pacific position performs unexpectedly, Bhuwanatala Indah 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 Bhuwanatala Indah will offset losses from the drop in Bhuwanatala Indah's long position.| Transcoal Pacific vs. Bank Tabungan Pensiunan | Transcoal Pacific vs. Chandra Asri Petrochemical | Transcoal Pacific vs. Mitra Keluarga Karyasehat | Transcoal Pacific vs. Merdeka Copper Gold |
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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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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