Correlation Between Bakrie Sumatera and Indocement Tunggal
Can any of the company-specific risk be diversified away by investing in both Bakrie Sumatera and Indocement Tunggal 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 Bakrie Sumatera and Indocement Tunggal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bakrie Sumatera Plantations and Indocement Tunggal Prakarsa, you can compare the effects of market volatilities on Bakrie Sumatera and Indocement Tunggal 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 Bakrie Sumatera with a short position of Indocement Tunggal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bakrie Sumatera and Indocement Tunggal.
Diversification Opportunities for Bakrie Sumatera and Indocement Tunggal
0.02 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Bakrie and Indocement is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Bakrie Sumatera Plantations and Indocement Tunggal Prakarsa in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Indocement Tunggal and Bakrie Sumatera 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 Bakrie Sumatera Plantations are associated (or correlated) with Indocement Tunggal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Indocement Tunggal has no effect on the direction of Bakrie Sumatera i.e., Bakrie Sumatera and Indocement Tunggal go up and down completely randomly.
Pair Corralation between Bakrie Sumatera and Indocement Tunggal
Assuming the 90 days trading horizon Bakrie Sumatera Plantations is expected to generate 1.31 times more return on investment than Indocement Tunggal. However, Bakrie Sumatera is 1.31 times more volatile than Indocement Tunggal Prakarsa. It trades about 0.02 of its potential returns per unit of risk. Indocement Tunggal Prakarsa is currently generating about -0.07 per unit of risk. If you would invest 11,100 in Bakrie Sumatera Plantations on September 2, 2024 and sell it today you would earn a total of 600.00 from holding Bakrie Sumatera Plantations or generate 5.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bakrie Sumatera Plantations vs. Indocement Tunggal Prakarsa
Performance |
| Timeline |
| Bakrie Sumatera Plan |
| Indocement Tunggal |
Bakrie Sumatera and Indocement Tunggal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bakrie Sumatera and Indocement Tunggal
The main advantage of trading using opposite Bakrie Sumatera and Indocement Tunggal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bakrie Sumatera position performs unexpectedly, Indocement Tunggal 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 Indocement Tunggal will offset losses from the drop in Indocement Tunggal's long position.| Bakrie Sumatera vs. Bank BRISyariah Tbk | Bakrie Sumatera vs. Mitra Pinasthika Mustika | Bakrie Sumatera vs. Jakarta Int Hotels | Bakrie Sumatera vs. Indosterling Technomedia Tbk |
| Indocement Tunggal vs. Perusahaan Gas Negara | Indocement Tunggal vs. Telkom Indonesia Tbk | Indocement Tunggal vs. Mitra Pinasthika Mustika | Indocement Tunggal vs. Jakarta Int Hotels |
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 Anywhere module to track or share privately all of your investments from the convenience of any device.
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