Correlation Between Bima Sakti and Nusantara Almazia
Can any of the company-specific risk be diversified away by investing in both Bima Sakti and Nusantara Almazia 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 Bima Sakti and Nusantara Almazia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bima Sakti Pertiwi and Nusantara Almazia, you can compare the effects of market volatilities on Bima Sakti and Nusantara Almazia 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 Bima Sakti with a short position of Nusantara Almazia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bima Sakti and Nusantara Almazia.
Diversification Opportunities for Bima Sakti and Nusantara Almazia
0.32 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Bima and Nusantara is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Bima Sakti Pertiwi and Nusantara Almazia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nusantara Almazia and Bima Sakti 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 Bima Sakti Pertiwi are associated (or correlated) with Nusantara Almazia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nusantara Almazia has no effect on the direction of Bima Sakti i.e., Bima Sakti and Nusantara Almazia go up and down completely randomly.
Pair Corralation between Bima Sakti and Nusantara Almazia
Assuming the 90 days trading horizon Bima Sakti Pertiwi is expected to generate 0.26 times more return on investment than Nusantara Almazia. However, Bima Sakti Pertiwi is 3.91 times less risky than Nusantara Almazia. It trades about -0.01 of its potential returns per unit of risk. Nusantara Almazia is currently generating about -0.01 per unit of risk. If you would invest 5,200 in Bima Sakti Pertiwi on September 25, 2024 and sell it today you would lose (100.00) from holding Bima Sakti Pertiwi or give up 1.92% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 98.44% |
Values | Daily Returns |
Bima Sakti Pertiwi vs. Nusantara Almazia
Performance |
Timeline |
Bima Sakti Pertiwi |
Nusantara Almazia |
Bima Sakti and Nusantara Almazia Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Bima Sakti and Nusantara Almazia
The main advantage of trading using opposite Bima Sakti and Nusantara Almazia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bima Sakti position performs unexpectedly, Nusantara Almazia 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 Nusantara Almazia will offset losses from the drop in Nusantara Almazia's long position.Bima Sakti vs. Armidian Karyatama Tbk | ||
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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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