Correlation Between Buyung Poetra and Estika Tata

Can any of the company-specific risk be diversified away by investing in both Buyung Poetra and Estika Tata 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 Buyung Poetra and Estika Tata into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Buyung Poetra Sembada and Estika Tata Tiara, you can compare the effects of market volatilities on Buyung Poetra and Estika Tata 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 Buyung Poetra with a short position of Estika Tata. Check out your portfolio center. Please also check ongoing floating volatility patterns of Buyung Poetra and Estika Tata.

Diversification Opportunities for Buyung Poetra and Estika Tata

0.46

Correlation Coefficient

Buyung Poetra  Estika Tata

Very weak diversification

The 3 months correlation between Buyung and Estika is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Buyung Poetra Sembada and Estika Tata Tiara in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Estika Tata Tiara and Buyung Poetra 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 Buyung Poetra Sembada are associated (or correlated) with Estika Tata. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Estika Tata Tiara has no effect on the direction of Buyung Poetra i.e., Buyung Poetra and Estika Tata go up and down completely randomly.

Pair Corralation between Buyung Poetra and Estika Tata

Assuming the 90 days trading horizon Buyung Poetra Sembada is expected to generate 1.89 times more return on investment than Estika Tata. However, Buyung Poetra is 1.89 times more volatile than Estika Tata Tiara. It trades about 0.22 of its potential returns per unit of risk. Estika Tata Tiara is currently generating about -0.31 per unit of risk. If you would invest  10,200  in Buyung Poetra Sembada on September 3, 2024 and sell it today you would earn a total of  2,200  from holding Buyung Poetra Sembada or generate 21.57% return on investment over 90 days.

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

Buyung Poetra Sembada  vs.  Estika Tata Tiara

Buyung Poetra Sembada

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Buyung Poetra Sembada are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent forward-looking signals, Buyung Poetra is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Estika Tata Tiara

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Estika Tata Tiara 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.

Pair Trading with Buyung Poetra and Estika Tata

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

The idea behind Buyung Poetra Sembada and Estika Tata Tiara 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.