Correlation Between Bali Towerindo and Abm Investama

Can any of the company-specific risk be diversified away by investing in both Bali Towerindo and Abm Investama 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 Bali Towerindo and Abm Investama into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Bali Towerindo Sentra and Abm Investama Tbk, you can compare the effects of market volatilities on Bali Towerindo and Abm Investama 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 Bali Towerindo with a short position of Abm Investama. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bali Towerindo and Abm Investama.

Diversification Opportunities for Bali Towerindo and Abm Investama

0.76

Correlation Coefficient

Bali Towerindo  Abm Investama

Poor diversification

The 3 months correlation between Bali and Abm is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Bali Towerindo Sentra and Abm Investama Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Abm Investama Tbk and Bali Towerindo 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 Bali Towerindo Sentra are associated (or correlated) with Abm Investama. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Abm Investama Tbk has no effect on the direction of Bali Towerindo i.e., Bali Towerindo and Abm Investama go up and down completely randomly.

Pair Corralation between Bali Towerindo and Abm Investama

Assuming the 90 days trading horizon Bali Towerindo Sentra is expected to generate 2.54 times more return on investment than Abm Investama. However, Bali Towerindo is 2.54 times more volatile than Abm Investama Tbk. It trades about -0.04 of its potential returns per unit of risk. Abm Investama Tbk is currently generating about -0.13 per unit of risk. If you would invest  145,000  in Bali Towerindo Sentra on December 22, 2024 and sell it today you would lose (19,500) from holding Bali Towerindo Sentra or give up 13.45% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.31%
Values	Daily Returns

Bali Towerindo Sentra  vs.  Abm Investama Tbk

Bali Towerindo Sentra

Risk-Adjusted Performance

Very Weak

Over the last 90 days Bali Towerindo Sentra 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.

Abm Investama Tbk

Risk-Adjusted Performance

Very Weak

Over the last 90 days Abm Investama 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 April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Bali Towerindo and Abm Investama

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

The idea behind Bali Towerindo Sentra and Abm Investama 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.