Correlation Between Kapuas Prima and Buana Listya
Can any of the company-specific risk be diversified away by investing in both Kapuas Prima and Buana Listya 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 Kapuas Prima and Buana Listya into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kapuas Prima Coal and Buana Listya Tama, you can compare the effects of market volatilities on Kapuas Prima and Buana Listya 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 Kapuas Prima with a short position of Buana Listya. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kapuas Prima and Buana Listya.
Diversification Opportunities for Kapuas Prima and Buana Listya
0.16 | Correlation Coefficient |
Average diversification
The 3 months correlation between Kapuas and Buana is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Kapuas Prima Coal and Buana Listya Tama in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Buana Listya Tama and Kapuas Prima 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 Kapuas Prima Coal are associated (or correlated) with Buana Listya. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Buana Listya Tama has no effect on the direction of Kapuas Prima i.e., Kapuas Prima and Buana Listya go up and down completely randomly.
Pair Corralation between Kapuas Prima and Buana Listya
Assuming the 90 days trading horizon Kapuas Prima Coal is expected to generate 0.68 times more return on investment than Buana Listya. However, Kapuas Prima Coal is 1.48 times less risky than Buana Listya. It trades about -0.16 of its potential returns per unit of risk. Buana Listya Tama is currently generating about -0.14 per unit of risk. If you would invest 1,600 in Kapuas Prima Coal on August 31, 2024 and sell it today you would lose (200.00) from holding Kapuas Prima Coal or give up 12.5% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kapuas Prima Coal vs. Buana Listya Tama
Performance |
| Timeline |
| Kapuas Prima Coal |
| Buana Listya Tama |
Kapuas Prima and Buana Listya Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kapuas Prima and Buana Listya
The main advantage of trading using opposite Kapuas Prima and Buana Listya positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kapuas Prima position performs unexpectedly, Buana Listya 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 Buana Listya will offset losses from the drop in Buana Listya's long position.| Kapuas Prima vs. Perusahaan Gas Negara | Kapuas Prima vs. Vale Indonesia Tbk | Kapuas Prima vs. Telkom Indonesia Tbk | Kapuas Prima vs. Mitra Pinasthika Mustika |
| Buana Listya vs. Matahari Department Store | Buana Listya vs. Multi Medika Internasional | Buana Listya vs. Visi Media Asia | Buana Listya vs. Bayan Resources 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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