Correlation Between Bukit Asam and Argha Karya
Can any of the company-specific risk be diversified away by investing in both Bukit Asam and Argha Karya 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 Bukit Asam and Argha Karya into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bukit Asam Tbk and Argha Karya Prima, you can compare the effects of market volatilities on Bukit Asam and Argha Karya 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 Bukit Asam with a short position of Argha Karya. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bukit Asam and Argha Karya.
Diversification Opportunities for Bukit Asam and Argha Karya
-0.59 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Bukit and Argha is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Bukit Asam Tbk and Argha Karya Prima in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Argha Karya Prima and Bukit Asam 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 Bukit Asam Tbk are associated (or correlated) with Argha Karya. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Argha Karya Prima has no effect on the direction of Bukit Asam i.e., Bukit Asam and Argha Karya go up and down completely randomly.
Pair Corralation between Bukit Asam and Argha Karya
Assuming the 90 days trading horizon Bukit Asam Tbk is expected to generate 0.77 times more return on investment than Argha Karya. However, Bukit Asam Tbk is 1.3 times less risky than Argha Karya. It trades about 0.14 of its potential returns per unit of risk. Argha Karya Prima is currently generating about -0.19 per unit of risk. If you would invest 262,000 in Bukit Asam Tbk on January 29, 2024 and sell it today you would earn a total of 26,000 from holding Bukit Asam Tbk or generate 9.92% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Bukit Asam Tbk vs. Argha Karya Prima
Performance |
Timeline |
Bukit Asam Tbk |
Argha Karya Prima |
Bukit Asam and Argha Karya Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Bukit Asam and Argha Karya
The main advantage of trading using opposite Bukit Asam and Argha Karya positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bukit Asam position performs unexpectedly, Argha Karya 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 Argha Karya will offset losses from the drop in Argha Karya's long position.Bukit Asam vs. Perusahaan Gas Negara | Bukit Asam vs. Indo Tambangraya Megah | Bukit Asam vs. Aneka Tambang Persero | Bukit Asam vs. Adaro Energy Tbk |
Argha Karya vs. Asiaplast Industries Tbk | Argha Karya vs. Alumindo Light Metal | Argha Karya vs. Berlina Tbk | Argha Karya vs. Anugerah Kagum Karya |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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