Correlation Between Bayu Buana and Akbar Indomakmur

Can any of the company-specific risk be diversified away by investing in both Bayu Buana and Akbar Indomakmur 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 Bayu Buana and Akbar Indomakmur into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Bayu Buana Tbk and Akbar Indomakmur Stimec, you can compare the effects of market volatilities on Bayu Buana and Akbar Indomakmur 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 Bayu Buana with a short position of Akbar Indomakmur. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bayu Buana and Akbar Indomakmur.

Diversification Opportunities for Bayu Buana and Akbar Indomakmur

-0.17

Correlation Coefficient

Bayu Buana  Akbar Indomakmur

Good diversification

The 3 months correlation between Bayu and Akbar is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Bayu Buana Tbk and Akbar Indomakmur Stimec in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Akbar Indomakmur Stimec and Bayu Buana 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 Bayu Buana Tbk are associated (or correlated) with Akbar Indomakmur. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Akbar Indomakmur Stimec has no effect on the direction of Bayu Buana i.e., Bayu Buana and Akbar Indomakmur go up and down completely randomly.

Pair Corralation between Bayu Buana and Akbar Indomakmur

Assuming the 90 days trading horizon Bayu Buana Tbk is expected to under-perform the Akbar Indomakmur. But the stock apears to be less risky and, when comparing its historical volatility, Bayu Buana Tbk is 4.41 times less risky than Akbar Indomakmur. The stock trades about -0.13 of its potential returns per unit of risk. The Akbar Indomakmur Stimec is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  35,000  in Akbar Indomakmur Stimec on December 27, 2024 and sell it today you would earn a total of  600.00  from holding Akbar Indomakmur Stimec or generate 1.71% return on investment over 90 days.

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

Bayu Buana Tbk  vs.  Akbar Indomakmur Stimec

Bayu Buana Tbk

Risk-Adjusted Performance

Very Weak

Over the last 90 days Bayu Buana 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.

Akbar Indomakmur Stimec

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Akbar Indomakmur Stimec are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Akbar Indomakmur disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Bayu Buana and Akbar Indomakmur

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

The idea behind Bayu Buana Tbk and Akbar Indomakmur Stimec 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.