Correlation Between Unilever Indonesia and Bukit Asam
Can any of the company-specific risk be diversified away by investing in both Unilever Indonesia and Bukit Asam 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 Unilever Indonesia and Bukit Asam into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Unilever Indonesia Tbk and Bukit Asam Tbk, you can compare the effects of market volatilities on Unilever Indonesia and Bukit Asam 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 Unilever Indonesia with a short position of Bukit Asam. Check out your portfolio center. Please also check ongoing floating volatility patterns of Unilever Indonesia and Bukit Asam.
Diversification Opportunities for Unilever Indonesia and Bukit Asam
0.29 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Unilever and Bukit is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Unilever Indonesia Tbk and Bukit Asam Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bukit Asam Tbk and Unilever Indonesia 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 Unilever Indonesia Tbk are associated (or correlated) with Bukit Asam. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bukit Asam Tbk has no effect on the direction of Unilever Indonesia i.e., Unilever Indonesia and Bukit Asam go up and down completely randomly.
Pair Corralation between Unilever Indonesia and Bukit Asam
Assuming the 90 days trading horizon Unilever Indonesia Tbk is expected to under-perform the Bukit Asam. In addition to that, Unilever Indonesia is 1.01 times more volatile than Bukit Asam Tbk. It trades about -0.08 of its total potential returns per unit of risk. Bukit Asam Tbk is currently generating about 0.04 per unit of volatility. If you would invest 205,135 in Bukit Asam Tbk on November 2, 2024 and sell it today you would earn a total of 60,865 from holding Bukit Asam Tbk or generate 29.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.79% |
| Values | Daily Returns |
Unilever Indonesia Tbk vs. Bukit Asam Tbk
Performance |
| Timeline |
| Unilever Indonesia Tbk |
| Bukit Asam Tbk |
Unilever Indonesia and Bukit Asam Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Unilever Indonesia and Bukit Asam
The main advantage of trading using opposite Unilever Indonesia and Bukit Asam positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Unilever Indonesia position performs unexpectedly, Bukit Asam 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 Bukit Asam will offset losses from the drop in Bukit Asam's long position.| Unilever Indonesia vs. PT Indofood Sukses | Unilever Indonesia vs. Astra International Tbk | Unilever Indonesia vs. Telkom Indonesia Tbk | Unilever Indonesia vs. Bank Central Asia |
| Bukit Asam vs. Perusahaan Gas Negara | Bukit Asam vs. Indo Tambangraya Megah | Bukit Asam vs. Aneka Tambang Persero | Bukit Asam vs. Adaro Energy Tbk |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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