Correlation Between Bintang Mitra and Bayu Buana

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

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

Diversification Opportunities for Bintang Mitra and Bayu Buana

0.77

Correlation Coefficient

Bintang Mitra  Bayu Buana

Poor diversification

The 3 months correlation between Bintang and Bayu is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Bintang Mitra Semestaraya and Bayu Buana Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bayu Buana Tbk and Bintang Mitra 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 Bintang Mitra Semestaraya are associated (or correlated) with Bayu Buana. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bayu Buana Tbk has no effect on the direction of Bintang Mitra i.e., Bintang Mitra and Bayu Buana go up and down completely randomly.

Pair Corralation between Bintang Mitra and Bayu Buana

Assuming the 90 days trading horizon Bintang Mitra Semestaraya is expected to generate 0.96 times more return on investment than Bayu Buana. However, Bintang Mitra Semestaraya is 1.04 times less risky than Bayu Buana. It trades about -0.05 of its potential returns per unit of risk. Bayu Buana Tbk is currently generating about -0.15 per unit of risk. If you would invest  31,800  in Bintang Mitra Semestaraya on December 27, 2024 and sell it today you would lose (1,800) from holding Bintang Mitra Semestaraya or give up 5.66% of portfolio value over 90 days.

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

Bintang Mitra Semestaraya  vs.  Bayu Buana Tbk

Bintang Mitra Semestaraya

Risk-Adjusted Performance

Very Weak

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

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.

Pair Trading with Bintang Mitra and Bayu Buana

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

The idea behind Bintang Mitra Semestaraya and Bayu Buana 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.