Correlation Between PT Barito and Rayonier

Can any of the company-specific risk be diversified away by investing in both PT Barito and Rayonier 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 PT Barito and Rayonier into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between PT Barito Pacific and Rayonier, you can compare the effects of market volatilities on PT Barito and Rayonier 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 PT Barito with a short position of Rayonier. Check out your portfolio center. Please also check ongoing floating volatility patterns of PT Barito and Rayonier.

Diversification Opportunities for PT Barito and Rayonier

-0.5

Correlation Coefficient

PT Barito  Rayonier

Very good diversification

The 3 months correlation between OB8 and Rayonier is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding PT Barito Pacific and Rayonier in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rayonier and PT Barito 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 PT Barito Pacific are associated (or correlated) with Rayonier. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rayonier has no effect on the direction of PT Barito i.e., PT Barito and Rayonier go up and down completely randomly.

Pair Corralation between PT Barito and Rayonier

Assuming the 90 days horizon PT Barito Pacific is expected to under-perform the Rayonier. In addition to that, PT Barito is 6.55 times more volatile than Rayonier. It trades about -0.03 of its total potential returns per unit of risk. Rayonier is currently generating about 0.11 per unit of volatility. If you would invest  2,752  in Rayonier on September 3, 2024 and sell it today you would earn a total of  208.00  from holding Rayonier or generate 7.56% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

PT Barito Pacific  vs.  Rayonier

PT Barito Pacific

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PT Barito Pacific has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Rayonier

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Rayonier are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Rayonier may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with PT Barito and Rayonier

The main advantage of trading using opposite PT Barito and Rayonier positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PT Barito position performs unexpectedly, Rayonier 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 Rayonier will offset losses from the drop in Rayonier's long position.

The idea behind PT Barito Pacific and Rayonier pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.