Correlation Between Soechi Lines and Blue Bird

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

By analyzing existing cross correlation between Soechi Lines Tbk and Blue Bird Tbk, you can compare the effects of market volatilities on Soechi Lines and Blue Bird 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 Soechi Lines with a short position of Blue Bird. Check out your portfolio center. Please also check ongoing floating volatility patterns of Soechi Lines and Blue Bird.

Diversification Opportunities for Soechi Lines and Blue Bird

0.39

Correlation Coefficient

Soechi Lines  Blue Bird

Weak diversification

The 3 months correlation between Soechi and Blue is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Soechi Lines Tbk and Blue Bird Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Blue Bird Tbk and Soechi Lines 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 Soechi Lines Tbk are associated (or correlated) with Blue Bird. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Blue Bird Tbk has no effect on the direction of Soechi Lines i.e., Soechi Lines and Blue Bird go up and down completely randomly.

Pair Corralation between Soechi Lines and Blue Bird

Assuming the 90 days trading horizon Soechi Lines is expected to generate 7.54 times less return on investment than Blue Bird. But when comparing it to its historical volatility, Soechi Lines Tbk is 1.05 times less risky than Blue Bird. It trades about 0.0 of its potential returns per unit of risk. Blue Bird Tbk is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  159,845  in Blue Bird Tbk on September 17, 2024 and sell it today you would earn a total of  13,155  from holding Blue Bird Tbk or generate 8.23% return on investment over 90 days.

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

Soechi Lines Tbk  vs.  Blue Bird Tbk

Soechi Lines Tbk

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Soechi Lines Tbk has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent forward-looking signals, Soechi Lines is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Blue Bird Tbk

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Blue Bird Tbk has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent forward-looking signals, Blue Bird is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Soechi Lines and Blue Bird

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

The idea behind Soechi Lines Tbk and Blue Bird Tbk 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.