Correlation Between Bukaka Teknik and Centratama Telekomunikasi

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Can any of the company-specific risk be diversified away by investing in both Bukaka Teknik and Centratama Telekomunikasi 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 Bukaka Teknik and Centratama Telekomunikasi into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bukaka Teknik Utama and Centratama Telekomunikasi Ind, you can compare the effects of market volatilities on Bukaka Teknik and Centratama Telekomunikasi 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 Bukaka Teknik with a short position of Centratama Telekomunikasi. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bukaka Teknik and Centratama Telekomunikasi.

Diversification Opportunities for Bukaka Teknik and Centratama Telekomunikasi

0.67
  Correlation Coefficient

Poor diversification

The 3 months correlation between Bukaka and Centratama is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Bukaka Teknik Utama and Centratama Telekomunikasi Ind in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Centratama Telekomunikasi and Bukaka Teknik 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 Bukaka Teknik Utama are associated (or correlated) with Centratama Telekomunikasi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Centratama Telekomunikasi has no effect on the direction of Bukaka Teknik i.e., Bukaka Teknik and Centratama Telekomunikasi go up and down completely randomly.

Pair Corralation between Bukaka Teknik and Centratama Telekomunikasi

Assuming the 90 days trading horizon Bukaka Teknik Utama is expected to generate 0.67 times more return on investment than Centratama Telekomunikasi. However, Bukaka Teknik Utama is 1.5 times less risky than Centratama Telekomunikasi. It trades about -0.03 of its potential returns per unit of risk. Centratama Telekomunikasi Ind is currently generating about -0.03 per unit of risk. If you would invest  115,000  in Bukaka Teknik Utama on October 27, 2024 and sell it today you would lose (28,000) from holding Bukaka Teknik Utama or give up 24.35% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Bukaka Teknik Utama  vs.  Centratama Telekomunikasi Ind

 Performance 
       Timeline  
Bukaka Teknik Utama 

Risk-Adjusted Performance

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Over the last 90 days Bukaka Teknik Utama 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.
Centratama Telekomunikasi 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Centratama Telekomunikasi Ind 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 February 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Bukaka Teknik and Centratama Telekomunikasi Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Bukaka Teknik and Centratama Telekomunikasi

The main advantage of trading using opposite Bukaka Teknik and Centratama Telekomunikasi positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bukaka Teknik position performs unexpectedly, Centratama Telekomunikasi 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 Centratama Telekomunikasi will offset losses from the drop in Centratama Telekomunikasi's long position.
The idea behind Bukaka Teknik Utama and Centratama Telekomunikasi Ind 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.

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