Correlation Between Bintang Oto and Bayu Buana

Can any of the company-specific risk be diversified away by investing in both Bintang Oto 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 Oto 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 Oto Global and Bayu Buana Tbk, you can compare the effects of market volatilities on Bintang Oto 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 Oto with a short position of Bayu Buana. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bintang Oto and Bayu Buana.

Diversification Opportunities for Bintang Oto and Bayu Buana

0.04

Correlation Coefficient

Bintang Oto  Bayu Buana

Significant diversification

The 3 months correlation between Bintang and Bayu is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Bintang Oto Global 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 Oto 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 Oto Global 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 Oto i.e., Bintang Oto and Bayu Buana go up and down completely randomly.

Pair Corralation between Bintang Oto and Bayu Buana

Assuming the 90 days trading horizon Bintang Oto Global is expected to under-perform the Bayu Buana. In addition to that, Bintang Oto is 2.73 times more volatile than Bayu Buana Tbk. It trades about -0.21 of its total potential returns per unit of risk. Bayu Buana Tbk is currently generating about 0.02 per unit of volatility. If you would invest  136,500  in Bayu Buana Tbk on September 15, 2024 and sell it today you would earn a total of  1,000.00  from holding Bayu Buana Tbk or generate 0.73% return on investment over 90 days.

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

Bintang Oto Global  vs.  Bayu Buana Tbk

Bintang Oto Global

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bintang Oto Global 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 January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Bayu Buana Tbk

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Bayu Buana Tbk are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent forward-looking signals, Bayu Buana 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 Bintang Oto and Bayu Buana

The main advantage of trading using opposite Bintang Oto and Bayu Buana positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bintang Oto 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 Oto Global 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.