Correlation Between Blue Bird and Centratama Telekomunikasi

Can any of the company-specific risk be diversified away by investing in both Blue Bird and Centratama Telekomunikasi 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 Blue Bird and Centratama Telekomunikasi into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Blue Bird Tbk and Centratama Telekomunikasi Ind, you can compare the effects of market volatilities on Blue Bird and Centratama Telekomunikasi 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 Blue Bird with a short position of Centratama Telekomunikasi. Check out your portfolio center. Please also check ongoing floating volatility patterns of Blue Bird and Centratama Telekomunikasi.

Diversification Opportunities for Blue Bird and Centratama Telekomunikasi

0.7

Correlation Coefficient

Blue Bird  Centratama Telekomunikasi

Poor diversification

The 3 months correlation between Blue and Centratama is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Blue Bird Tbk and Centratama Telekomunikasi Ind in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Centratama Telekomunikasi and Blue Bird 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 Blue Bird Tbk are associated (or correlated) with Centratama Telekomunikasi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Centratama Telekomunikasi has no effect on the direction of Blue Bird i.e., Blue Bird and Centratama Telekomunikasi go up and down completely randomly.

Pair Corralation between Blue Bird and Centratama Telekomunikasi

Assuming the 90 days trading horizon Blue Bird Tbk is expected to generate 0.66 times more return on investment than Centratama Telekomunikasi. However, Blue Bird Tbk is 1.51 times less risky than Centratama Telekomunikasi. It trades about 0.02 of its potential returns per unit of risk. Centratama Telekomunikasi Ind is currently generating about -0.03 per unit of risk. If you would invest  132,521  in Blue Bird Tbk on October 12, 2024 and sell it today you would earn a total of  17,479  from holding Blue Bird Tbk or generate 13.19% return on investment over 90 days.

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

Blue Bird Tbk  vs.  Centratama Telekomunikasi Ind

Blue Bird Tbk

Risk-Adjusted Performance

0 of 100

Very Weak

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

Centratama Telekomunikasi

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Centratama Telekomunikasi Ind 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 Blue Bird and Centratama Telekomunikasi

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

The idea behind Blue Bird Tbk and Centratama Telekomunikasi Ind 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.