Correlation Between Austindo Nusantara and Bakrie Sumatera

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

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

Diversification Opportunities for Austindo Nusantara and Bakrie Sumatera

-0.08

Correlation Coefficient

Austindo Nusantara  Bakrie Sumatera

Good diversification

The 3 months correlation between Austindo and Bakrie is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Austindo Nusantara Jaya and Bakrie Sumatera Plantations in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bakrie Sumatera Plan and Austindo Nusantara 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 Austindo Nusantara Jaya are associated (or correlated) with Bakrie Sumatera. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bakrie Sumatera Plan has no effect on the direction of Austindo Nusantara i.e., Austindo Nusantara and Bakrie Sumatera go up and down completely randomly.

Pair Corralation between Austindo Nusantara and Bakrie Sumatera

Assuming the 90 days trading horizon Austindo Nusantara Jaya is expected to generate 0.58 times more return on investment than Bakrie Sumatera. However, Austindo Nusantara Jaya is 1.72 times less risky than Bakrie Sumatera. It trades about 0.08 of its potential returns per unit of risk. Bakrie Sumatera Plantations is currently generating about 0.0 per unit of risk. If you would invest  72,500  in Austindo Nusantara Jaya on December 4, 2024 and sell it today you would earn a total of  23,500  from holding Austindo Nusantara Jaya or generate 32.41% return on investment over 90 days.

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

Austindo Nusantara Jaya  vs.  Bakrie Sumatera Plantations

Austindo Nusantara Jaya

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Austindo Nusantara Jaya are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Austindo Nusantara disclosed solid returns over the last few months and may actually be approaching a breakup point.

Bakrie Sumatera Plan

Risk-Adjusted Performance

Very Weak

Over the last 90 days Bakrie Sumatera Plantations has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's forward-looking signals remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Pair Trading with Austindo Nusantara and Bakrie Sumatera

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

The idea behind Austindo Nusantara Jaya and Bakrie Sumatera Plantations 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.