Correlation Between Bayan Resources and Tira Austenite

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

Diversification Opportunities for Bayan Resources and Tira Austenite

0.4
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Bayan and Tira is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Bayan Resources Tbk and Tira Austenite Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tira Austenite Tbk and Bayan Resources 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 Bayan Resources Tbk are associated (or correlated) with Tira Austenite. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tira Austenite Tbk has no effect on the direction of Bayan Resources i.e., Bayan Resources and Tira Austenite go up and down completely randomly.

Pair Corralation between Bayan Resources and Tira Austenite

Assuming the 90 days trading horizon Bayan Resources Tbk is expected to generate 0.71 times more return on investment than Tira Austenite. However, Bayan Resources Tbk is 1.4 times less risky than Tira Austenite. It trades about 0.42 of its potential returns per unit of risk. Tira Austenite Tbk is currently generating about -0.09 per unit of risk. If you would invest  1,720,000  in Bayan Resources Tbk on September 1, 2024 and sell it today you would earn a total of  237,500  from holding Bayan Resources Tbk or generate 13.81% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy95.45%
ValuesDaily Returns

Bayan Resources Tbk  vs.  Tira Austenite Tbk

 Performance 
       Timeline  
Bayan Resources Tbk 

Risk-Adjusted Performance

14 of 100

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

Risk-Adjusted Performance

8 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Tira Austenite Tbk are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Tira Austenite disclosed solid returns over the last few months and may actually be approaching a breakup point.

Bayan Resources and Tira Austenite Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Bayan Resources and Tira Austenite

The main advantage of trading using opposite Bayan Resources and Tira Austenite positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bayan Resources position performs unexpectedly, Tira Austenite 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 Tira Austenite will offset losses from the drop in Tira Austenite's long position.
The idea behind Bayan Resources Tbk and Tira Austenite 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.

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