Correlation Between Tifa Finance and Batavia Prosperindo
Can any of the company-specific risk be diversified away by investing in both Tifa Finance and Batavia Prosperindo 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 Tifa Finance and Batavia Prosperindo into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tifa Finance Tbk and Batavia Prosperindo Finance, you can compare the effects of market volatilities on Tifa Finance and Batavia Prosperindo 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 Tifa Finance with a short position of Batavia Prosperindo. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tifa Finance and Batavia Prosperindo.
Diversification Opportunities for Tifa Finance and Batavia Prosperindo
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Tifa and Batavia is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Tifa Finance Tbk and Batavia Prosperindo Finance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Batavia Prosperindo and Tifa Finance 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 Tifa Finance Tbk are associated (or correlated) with Batavia Prosperindo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Batavia Prosperindo has no effect on the direction of Tifa Finance i.e., Tifa Finance and Batavia Prosperindo go up and down completely randomly.
Pair Corralation between Tifa Finance and Batavia Prosperindo
Assuming the 90 days trading horizon Tifa Finance Tbk is expected to generate 0.61 times more return on investment than Batavia Prosperindo. However, Tifa Finance Tbk is 1.65 times less risky than Batavia Prosperindo. It trades about -0.01 of its potential returns per unit of risk. Batavia Prosperindo Finance is currently generating about -0.03 per unit of risk. If you would invest 60,000 in Tifa Finance Tbk on September 2, 2024 and sell it today you would lose (4,500) from holding Tifa Finance Tbk or give up 7.5% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Tifa Finance Tbk vs. Batavia Prosperindo Finance
Performance |
| Timeline |
| Tifa Finance Tbk |
| Batavia Prosperindo |
Tifa Finance and Batavia Prosperindo Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tifa Finance and Batavia Prosperindo
The main advantage of trading using opposite Tifa Finance and Batavia Prosperindo positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tifa Finance position performs unexpectedly, Batavia Prosperindo 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 Batavia Prosperindo will offset losses from the drop in Batavia Prosperindo's long position.| Tifa Finance vs. Ace Hardware Indonesia | Tifa Finance vs. Merdeka Copper Gold | Tifa Finance vs. Mitra Pinasthika Mustika | Tifa Finance vs. Jakarta Int Hotels |
| Batavia Prosperindo vs. Buana Finance Tbk | Batavia Prosperindo vs. Clipan Finance Indonesia | Batavia Prosperindo vs. Asuransi Bintang Tbk | Batavia Prosperindo vs. Bank Bumi Arta |
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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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