Correlation Between Baramulti Suksessarana and TBS Energi

Can any of the company-specific risk be diversified away by investing in both Baramulti Suksessarana and TBS Energi 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 Baramulti Suksessarana and TBS Energi into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Baramulti Suksessarana Tbk and TBS Energi Utama, you can compare the effects of market volatilities on Baramulti Suksessarana and TBS Energi 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 Baramulti Suksessarana with a short position of TBS Energi. Check out your portfolio center. Please also check ongoing floating volatility patterns of Baramulti Suksessarana and TBS Energi.

Diversification Opportunities for Baramulti Suksessarana and TBS Energi

0.08

Correlation Coefficient

Baramulti Suksessarana  TBS Energi

Significant diversification

The 3 months correlation between Baramulti and TBS is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Baramulti Suksessarana Tbk and TBS Energi Utama in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TBS Energi Utama and Baramulti Suksessarana 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 Baramulti Suksessarana Tbk are associated (or correlated) with TBS Energi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TBS Energi Utama has no effect on the direction of Baramulti Suksessarana i.e., Baramulti Suksessarana and TBS Energi go up and down completely randomly.

Pair Corralation between Baramulti Suksessarana and TBS Energi

Assuming the 90 days trading horizon Baramulti Suksessarana Tbk is expected to generate 0.33 times more return on investment than TBS Energi. However, Baramulti Suksessarana Tbk is 3.06 times less risky than TBS Energi. It trades about -0.22 of its potential returns per unit of risk. TBS Energi Utama is currently generating about -0.18 per unit of risk. If you would invest  447,122  in Baramulti Suksessarana Tbk on September 5, 2024 and sell it today you would lose (29,122) from holding Baramulti Suksessarana Tbk or give up 6.51% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	95.45%
Values	Daily Returns

Baramulti Suksessarana Tbk  vs.  TBS Energi Utama

Baramulti Suksessarana

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Baramulti Suksessarana 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.

TBS Energi Utama

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days TBS Energi Utama has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent forward-looking signals, TBS Energi 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 Baramulti Suksessarana and TBS Energi

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

The idea behind Baramulti Suksessarana Tbk and TBS Energi Utama 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.