Correlation Between Bali Bintang and Inocycle Technology

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

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

Diversification Opportunities for Bali Bintang and Inocycle Technology

0.2

Correlation Coefficient

Bali Bintang  Inocycle Technology

Modest diversification

The 3 months correlation between Bali and Inocycle is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Bali Bintang Sejahtera and Inocycle Technology Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Inocycle Technology Tbk and Bali Bintang 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 Bali Bintang Sejahtera are associated (or correlated) with Inocycle Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Inocycle Technology Tbk has no effect on the direction of Bali Bintang i.e., Bali Bintang and Inocycle Technology go up and down completely randomly.

Pair Corralation between Bali Bintang and Inocycle Technology

Assuming the 90 days trading horizon Bali Bintang Sejahtera is expected to under-perform the Inocycle Technology. But the stock apears to be less risky and, when comparing its historical volatility, Bali Bintang Sejahtera is 1.31 times less risky than Inocycle Technology. The stock trades about -0.06 of its potential returns per unit of risk. The Inocycle Technology Tbk is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest  9,300  in Inocycle Technology Tbk on December 31, 2024 and sell it today you would lose (700.00) from holding Inocycle Technology Tbk or give up 7.53% of portfolio value over 90 days.

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

Bali Bintang Sejahtera  vs.  Inocycle Technology Tbk

Bali Bintang Sejahtera

Risk-Adjusted Performance

Very Weak

Over the last 90 days Bali Bintang Sejahtera 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.

Inocycle Technology Tbk

Risk-Adjusted Performance

Very Weak

Over the last 90 days Inocycle Technology Tbk 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 Bali Bintang and Inocycle Technology

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

The idea behind Bali Bintang Sejahtera and Inocycle Technology 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 Valuation module to check real value of public entities based on technical and fundamental data.