Correlation Between Bhuwanatala Indah and Bukit Darmo

Can any of the company-specific risk be diversified away by investing in both Bhuwanatala Indah and Bukit Darmo 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 Bhuwanatala Indah and Bukit Darmo into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Bhuwanatala Indah Permai and Bukit Darmo Property, you can compare the effects of market volatilities on Bhuwanatala Indah and Bukit Darmo 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 Bhuwanatala Indah with a short position of Bukit Darmo. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bhuwanatala Indah and Bukit Darmo.

Diversification Opportunities for Bhuwanatala Indah and Bukit Darmo

-0.4

Correlation Coefficient

Bhuwanatala Indah  Bukit Darmo

Very good diversification

The 3 months correlation between Bhuwanatala and Bukit is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Bhuwanatala Indah Permai and Bukit Darmo Property in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bukit Darmo Property and Bhuwanatala Indah 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 Bhuwanatala Indah Permai are associated (or correlated) with Bukit Darmo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bukit Darmo Property has no effect on the direction of Bhuwanatala Indah i.e., Bhuwanatala Indah and Bukit Darmo go up and down completely randomly.

Pair Corralation between Bhuwanatala Indah and Bukit Darmo

Assuming the 90 days trading horizon Bhuwanatala Indah Permai is expected to under-perform the Bukit Darmo. In addition to that, Bhuwanatala Indah is 1.24 times more volatile than Bukit Darmo Property. It trades about -0.38 of its total potential returns per unit of risk. Bukit Darmo Property is currently generating about -0.03 per unit of volatility. If you would invest  4,900  in Bukit Darmo Property on December 2, 2024 and sell it today you would lose (100.00) from holding Bukit Darmo Property or give up 2.04% of portfolio value over 90 days.

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

Bhuwanatala Indah Permai  vs.  Bukit Darmo Property

Bhuwanatala Indah Permai

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Bhuwanatala Indah Permai are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent forward-looking signals, Bhuwanatala Indah is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Bukit Darmo Property

Risk-Adjusted Performance

Very Weak

Over the last 90 days Bukit Darmo Property has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent forward-looking signals, Bukit Darmo is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Bhuwanatala Indah and Bukit Darmo

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

The idea behind Bhuwanatala Indah Permai and Bukit Darmo Property 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.

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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.