Correlation Between Bakrie Sumatera and Red Planet
Can any of the company-specific risk be diversified away by investing in both Bakrie Sumatera and Red Planet 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 Red Planet 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 Red Planet Indonesia, you can compare the effects of market volatilities on Bakrie Sumatera and Red Planet 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 Red Planet. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bakrie Sumatera and Red Planet.
Diversification Opportunities for Bakrie Sumatera and Red Planet
0.08 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Bakrie and Red is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Bakrie Sumatera Plantations and Red Planet Indonesia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Red Planet Indonesia 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 Red Planet. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Red Planet Indonesia has no effect on the direction of Bakrie Sumatera i.e., Bakrie Sumatera and Red Planet go up and down completely randomly.
Pair Corralation between Bakrie Sumatera and Red Planet
Assuming the 90 days trading horizon Bakrie Sumatera Plantations is expected to generate 0.67 times more return on investment than Red Planet. However, Bakrie Sumatera Plantations is 1.49 times less risky than Red Planet. It trades about 0.03 of its potential returns per unit of risk. Red Planet Indonesia is currently generating about -0.03 per unit of risk. If you would invest 10,200 in Bakrie Sumatera Plantations on September 1, 2024 and sell it today you would earn a total of 1,500 from holding Bakrie Sumatera Plantations or generate 14.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.72% |
| Values | Daily Returns |
Bakrie Sumatera Plantations vs. Red Planet Indonesia
Performance |
| Timeline |
| Bakrie Sumatera Plan |
| Red Planet Indonesia |
Bakrie Sumatera and Red Planet Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bakrie Sumatera and Red Planet
The main advantage of trading using opposite Bakrie Sumatera and Red Planet positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bakrie Sumatera position performs unexpectedly, Red Planet 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 Red Planet will offset losses from the drop in Red Planet'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 |
| Red Planet vs. Japfa Comfeed Indonesia | Red Planet vs. Charoen Pokphand Indonesia | Red Planet vs. Erajaya Swasembada Tbk | Red Planet vs. Indofood Cbp Sukses |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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