Correlation Between Total Bangun and PT Indonesia
Can any of the company-specific risk be diversified away by investing in both Total Bangun and PT Indonesia 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 Total Bangun and PT Indonesia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Total Bangun Persada and PT Indonesia Kendaraan, you can compare the effects of market volatilities on Total Bangun and PT Indonesia 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 Total Bangun with a short position of PT Indonesia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Total Bangun and PT Indonesia.
Diversification Opportunities for Total Bangun and PT Indonesia
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Total and IPCC is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Total Bangun Persada and PT Indonesia Kendaraan in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PT Indonesia Kendaraan and Total Bangun 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 Total Bangun Persada are associated (or correlated) with PT Indonesia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PT Indonesia Kendaraan has no effect on the direction of Total Bangun i.e., Total Bangun and PT Indonesia go up and down completely randomly.
Pair Corralation between Total Bangun and PT Indonesia
Assuming the 90 days trading horizon Total Bangun Persada is expected to generate 1.81 times more return on investment than PT Indonesia. However, Total Bangun is 1.81 times more volatile than PT Indonesia Kendaraan. It trades about 0.1 of its potential returns per unit of risk. PT Indonesia Kendaraan is currently generating about 0.07 per unit of risk. If you would invest 21,267 in Total Bangun Persada on September 13, 2024 and sell it today you would earn a total of 50,233 from holding Total Bangun Persada or generate 236.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.79% |
| Values | Daily Returns |
Total Bangun Persada vs. PT Indonesia Kendaraan
Performance |
| Timeline |
| Total Bangun Persada |
| PT Indonesia Kendaraan |
Total Bangun and PT Indonesia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Total Bangun and PT Indonesia
The main advantage of trading using opposite Total Bangun and PT Indonesia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Total Bangun position performs unexpectedly, PT Indonesia 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 Indonesia will offset losses from the drop in PT Indonesia's long position.| Total Bangun vs. PT Indonesia Kendaraan | Total Bangun vs. Surya Toto Indonesia | Total Bangun vs. Mitra Pinasthika Mustika | Total Bangun vs. Integra Indocabinet Tbk |
| PT Indonesia vs. Jasa Armada Indonesia | PT Indonesia vs. Cikarang Listrindo Tbk | PT Indonesia vs. Mitra Pinasthika Mustika | PT Indonesia vs. Wijaya Karya Bangunan |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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