Correlation Between Bakrie Sumatera and Bisi International

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

By analyzing existing cross correlation between Bakrie Sumatera Plantations and Bisi International Tbk, you can compare the effects of market volatilities on Bakrie Sumatera and Bisi International 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 Bakrie Sumatera with a short position of Bisi International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bakrie Sumatera and Bisi International.

Diversification Opportunities for Bakrie Sumatera and Bisi International

-0.93

Correlation Coefficient

Bakrie Sumatera  Bisi International

Pay attention - limited upside

The 3 months correlation between Bakrie and Bisi is -0.93. Overlapping area represents the amount of risk that can be diversified away by holding Bakrie Sumatera Plantations and Bisi International Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bisi International Tbk and Bakrie Sumatera 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 Bakrie Sumatera Plantations are associated (or correlated) with Bisi International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bisi International Tbk has no effect on the direction of Bakrie Sumatera i.e., Bakrie Sumatera and Bisi International go up and down completely randomly.

Pair Corralation between Bakrie Sumatera and Bisi International

Assuming the 90 days trading horizon Bakrie Sumatera Plantations is expected to generate 1.12 times more return on investment than Bisi International. However, Bakrie Sumatera is 1.12 times more volatile than Bisi International Tbk. It trades about 0.25 of its potential returns per unit of risk. Bisi International Tbk is currently generating about -0.16 per unit of risk. If you would invest  8,300  in Bakrie Sumatera Plantations on September 13, 2024 and sell it today you would earn a total of  3,900  from holding Bakrie Sumatera Plantations or generate 46.99% return on investment over 90 days.

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

Bakrie Sumatera Plantations  vs.  Bisi International Tbk

Bakrie Sumatera Plan

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Bakrie Sumatera Plantations are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Bakrie Sumatera disclosed solid returns over the last few months and may actually be approaching a breakup point.

Bisi International Tbk

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bisi International Tbk has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's forward-looking signals remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Bakrie Sumatera and Bisi International

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

The idea behind Bakrie Sumatera Plantations and Bisi International 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.

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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.