Correlation Between Abm Investama and Bali Towerindo
Can any of the company-specific risk be diversified away by investing in both Abm Investama and Bali Towerindo 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 Abm Investama and Bali Towerindo into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Abm Investama Tbk and Bali Towerindo Sentra, you can compare the effects of market volatilities on Abm Investama and Bali Towerindo 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 Abm Investama with a short position of Bali Towerindo. Check out your portfolio center. Please also check ongoing floating volatility patterns of Abm Investama and Bali Towerindo.
Diversification Opportunities for Abm Investama and Bali Towerindo
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Abm and Bali is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Abm Investama Tbk and Bali Towerindo Sentra in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bali Towerindo Sentra and Abm Investama 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 Abm Investama Tbk are associated (or correlated) with Bali Towerindo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bali Towerindo Sentra has no effect on the direction of Abm Investama i.e., Abm Investama and Bali Towerindo go up and down completely randomly.
Pair Corralation between Abm Investama and Bali Towerindo
Assuming the 90 days trading horizon Abm Investama Tbk is expected to generate 0.48 times more return on investment than Bali Towerindo. However, Abm Investama Tbk is 2.07 times less risky than Bali Towerindo. It trades about -0.14 of its potential returns per unit of risk. Bali Towerindo Sentra is currently generating about -0.14 per unit of risk. If you would invest 354,000 in Abm Investama Tbk on December 28, 2024 and sell it today you would lose (46,000) from holding Abm Investama Tbk or give up 12.99% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Strong |
Accuracy | 98.33% |
Values | Daily Returns |
Abm Investama Tbk vs. Bali Towerindo Sentra
Performance |
Timeline |
Abm Investama Tbk |
Bali Towerindo Sentra |
Abm Investama and Bali Towerindo Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Abm Investama and Bali Towerindo
The main advantage of trading using opposite Abm Investama and Bali Towerindo positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Abm Investama position performs unexpectedly, Bali Towerindo 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 Bali Towerindo will offset losses from the drop in Bali Towerindo's long position.Abm Investama vs. Baramulti Suksessarana Tbk | Abm Investama vs. Mitrabara Adiperdana PT | Abm Investama vs. Sumber Alfaria Trijaya | Abm Investama vs. Surya Esa Perkasa |
Bali Towerindo vs. Austindo Nusantara Jaya | Bali Towerindo vs. Inti Bangun Sejahtera | Bali Towerindo vs. Bukaka Teknik Utama | Bali Towerindo vs. Blue Bird Tbk |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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