Correlation Between Bakrie Brothers and Link Net

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

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

Diversification Opportunities for Bakrie Brothers and Link Net

-0.53

Correlation Coefficient

Bakrie Brothers  Link Net

Excellent diversification

The 3 months correlation between Bakrie and Link is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Bakrie Brothers Tbk and Link Net Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Link Net Tbk and Bakrie Brothers 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 Bakrie Brothers Tbk are associated (or correlated) with Link Net. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Link Net Tbk has no effect on the direction of Bakrie Brothers i.e., Bakrie Brothers and Link Net go up and down completely randomly.

Pair Corralation between Bakrie Brothers and Link Net

Assuming the 90 days trading horizon Bakrie Brothers Tbk is expected to under-perform the Link Net. But the stock apears to be less risky and, when comparing its historical volatility, Bakrie Brothers Tbk is 1.51 times less risky than Link Net. The stock trades about -0.13 of its potential returns per unit of risk. The Link Net Tbk is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  123,000  in Link Net Tbk on November 29, 2024 and sell it today you would earn a total of  87,000  from holding Link Net Tbk or generate 70.73% return on investment over 90 days.

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

Bakrie Brothers Tbk  vs.  Link Net Tbk

Bakrie Brothers Tbk

Risk-Adjusted Performance

Very Weak

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

Link Net Tbk

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Link Net Tbk are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Link Net disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Bakrie Brothers and Link Net

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

The idea behind Bakrie Brothers Tbk and Link Net 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.

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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.