Correlation Between Berlian Laju and Bakrie Brothers

Can any of the company-specific risk be diversified away by investing in both Berlian Laju and Bakrie Brothers 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 Berlian Laju and Bakrie Brothers into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Berlian Laju Tanker and Bakrie Brothers Tbk, you can compare the effects of market volatilities on Berlian Laju and Bakrie Brothers 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 Berlian Laju with a short position of Bakrie Brothers. Check out your portfolio center. Please also check ongoing floating volatility patterns of Berlian Laju and Bakrie Brothers.

Diversification Opportunities for Berlian Laju and Bakrie Brothers

0.4

Correlation Coefficient

Berlian Laju  Bakrie Brothers

Very weak diversification

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

Pair Corralation between Berlian Laju and Bakrie Brothers

Assuming the 90 days trading horizon Berlian Laju is expected to generate 1.52 times less return on investment than Bakrie Brothers. But when comparing it to its historical volatility, Berlian Laju Tanker is 1.24 times less risky than Bakrie Brothers. It trades about 0.02 of its potential returns per unit of risk. Bakrie Brothers Tbk is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  4,800  in Bakrie Brothers Tbk on September 6, 2024 and sell it today you would earn a total of  0.00  from holding Bakrie Brothers Tbk or generate 0.0% return on investment over 90 days.

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

Berlian Laju Tanker  vs.  Bakrie Brothers Tbk

Berlian Laju Tanker

Risk-Adjusted Performance

1 of 100

Weak

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

Bakrie Brothers Tbk

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Bakrie Brothers Tbk are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Bakrie Brothers may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Berlian Laju and Bakrie Brothers

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

The idea behind Berlian Laju Tanker and Bakrie Brothers 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.