Correlation Between Bhakti Multi and Bundamedik Tbk

Can any of the company-specific risk be diversified away by investing in both Bhakti Multi and Bundamedik Tbk 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 Bhakti Multi and Bundamedik Tbk into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Bhakti Multi Artha and Bundamedik Tbk PT, you can compare the effects of market volatilities on Bhakti Multi and Bundamedik Tbk 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 Bhakti Multi with a short position of Bundamedik Tbk. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bhakti Multi and Bundamedik Tbk.

Diversification Opportunities for Bhakti Multi and Bundamedik Tbk

0.56

Correlation Coefficient

Bhakti Multi  Bundamedik Tbk

Very weak diversification

The 3 months correlation between Bhakti and Bundamedik is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Bhakti Multi Artha and Bundamedik Tbk PT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bundamedik Tbk PT and Bhakti Multi 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 Bhakti Multi Artha are associated (or correlated) with Bundamedik Tbk. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bundamedik Tbk PT has no effect on the direction of Bhakti Multi i.e., Bhakti Multi and Bundamedik Tbk go up and down completely randomly.

Pair Corralation between Bhakti Multi and Bundamedik Tbk

Assuming the 90 days trading horizon Bhakti Multi Artha is expected to under-perform the Bundamedik Tbk. But the stock apears to be less risky and, when comparing its historical volatility, Bhakti Multi Artha is 1.01 times less risky than Bundamedik Tbk. The stock trades about -0.05 of its potential returns per unit of risk. The Bundamedik Tbk PT is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest  39,360  in Bundamedik Tbk PT on September 3, 2024 and sell it today you would lose (14,360) from holding Bundamedik Tbk PT or give up 36.48% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	99.79%
Values	Daily Returns

Bhakti Multi Artha  vs.  Bundamedik Tbk PT

Bhakti Multi Artha

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bhakti Multi Artha 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 January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Bundamedik Tbk PT

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bundamedik Tbk PT 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 Bhakti Multi and Bundamedik Tbk

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

The idea behind Bhakti Multi Artha and Bundamedik Tbk PT 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.