Correlation Between Bukit Asam and MD Pictures

Can any of the company-specific risk be diversified away by investing in both Bukit Asam and MD Pictures 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 Bukit Asam and MD Pictures into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Bukit Asam Tbk and MD Pictures Tbk, you can compare the effects of market volatilities on Bukit Asam and MD Pictures 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 Bukit Asam with a short position of MD Pictures. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bukit Asam and MD Pictures.

Diversification Opportunities for Bukit Asam and MD Pictures

-0.58

Correlation Coefficient

Bukit Asam  MD Pictures

Excellent diversification

The 3 months correlation between Bukit and FILM is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Bukit Asam Tbk and MD Pictures Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MD Pictures Tbk and Bukit Asam 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 Bukit Asam Tbk are associated (or correlated) with MD Pictures. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MD Pictures Tbk has no effect on the direction of Bukit Asam i.e., Bukit Asam and MD Pictures go up and down completely randomly.

Pair Corralation between Bukit Asam and MD Pictures

Assuming the 90 days trading horizon Bukit Asam Tbk is expected to generate 0.42 times more return on investment than MD Pictures. However, Bukit Asam Tbk is 2.4 times less risky than MD Pictures. It trades about 0.07 of its potential returns per unit of risk. MD Pictures Tbk is currently generating about 0.0 per unit of risk. If you would invest  243,000  in Bukit Asam Tbk on September 14, 2024 and sell it today you would earn a total of  35,000  from holding Bukit Asam Tbk or generate 14.4% return on investment over 90 days.

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

Bukit Asam Tbk  vs.  MD Pictures Tbk

Bukit Asam Tbk

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bukit Asam Tbk has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent forward-looking signals, Bukit Asam is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

MD Pictures Tbk

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days MD Pictures Tbk has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent forward-looking signals, MD Pictures 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 Bukit Asam and MD Pictures

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

The idea behind Bukit Asam Tbk and MD Pictures 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.