Correlation Between PT Barito and Liaoning Port

Can any of the company-specific risk be diversified away by investing in both PT Barito and Liaoning Port 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 PT Barito and Liaoning Port into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between PT Barito Pacific and Liaoning Port CoLtd, you can compare the effects of market volatilities on PT Barito and Liaoning Port 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 PT Barito with a short position of Liaoning Port. Check out your portfolio center. Please also check ongoing floating volatility patterns of PT Barito and Liaoning Port.

Diversification Opportunities for PT Barito and Liaoning Port

0.66

Correlation Coefficient

PT Barito  Liaoning Port

Poor diversification

The 3 months correlation between OB8 and Liaoning is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding PT Barito Pacific and Liaoning Port CoLtd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Liaoning Port CoLtd and PT Barito 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 PT Barito Pacific are associated (or correlated) with Liaoning Port. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Liaoning Port CoLtd has no effect on the direction of PT Barito i.e., PT Barito and Liaoning Port go up and down completely randomly.

Pair Corralation between PT Barito and Liaoning Port

Assuming the 90 days horizon PT Barito Pacific is expected to under-perform the Liaoning Port. In addition to that, PT Barito is 3.77 times more volatile than Liaoning Port CoLtd. It trades about -0.11 of its total potential returns per unit of risk. Liaoning Port CoLtd is currently generating about -0.08 per unit of volatility. If you would invest  8.05  in Liaoning Port CoLtd on December 28, 2024 and sell it today you would lose (0.55) from holding Liaoning Port CoLtd or give up 6.83% of portfolio value over 90 days.

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

PT Barito Pacific  vs.  Liaoning Port CoLtd

PT Barito Pacific

Risk-Adjusted Performance

Very Weak

Over the last 90 days PT Barito Pacific has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Liaoning Port CoLtd

Risk-Adjusted Performance

Very Weak

Over the last 90 days Liaoning Port CoLtd has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with PT Barito and Liaoning Port

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

The idea behind PT Barito Pacific and Liaoning Port CoLtd 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.