Correlation Between Tunas Baru and Bank BRISyariah

Can any of the company-specific risk be diversified away by investing in both Tunas Baru and Bank BRISyariah 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 Tunas Baru and Bank BRISyariah into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Tunas Baru Lampung and Bank BRISyariah Tbk, you can compare the effects of market volatilities on Tunas Baru and Bank BRISyariah 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 Tunas Baru with a short position of Bank BRISyariah. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tunas Baru and Bank BRISyariah.

Diversification Opportunities for Tunas Baru and Bank BRISyariah

0.59

Correlation Coefficient

Tunas Baru  Bank BRISyariah

Very weak diversification

The 3 months correlation between Tunas and Bank is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Tunas Baru Lampung and Bank BRISyariah Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bank BRISyariah Tbk and Tunas Baru 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 Tunas Baru Lampung are associated (or correlated) with Bank BRISyariah. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bank BRISyariah Tbk has no effect on the direction of Tunas Baru i.e., Tunas Baru and Bank BRISyariah go up and down completely randomly.

Pair Corralation between Tunas Baru and Bank BRISyariah

Assuming the 90 days trading horizon Tunas Baru Lampung is expected to generate 0.54 times more return on investment than Bank BRISyariah. However, Tunas Baru Lampung is 1.84 times less risky than Bank BRISyariah. It trades about -0.05 of its potential returns per unit of risk. Bank BRISyariah Tbk is currently generating about -0.06 per unit of risk. If you would invest  61,500  in Tunas Baru Lampung on December 29, 2024 and sell it today you would lose (3,500) from holding Tunas Baru Lampung or give up 5.69% of portfolio value over 90 days.

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

Tunas Baru Lampung  vs.  Bank BRISyariah Tbk

Tunas Baru Lampung

Risk-Adjusted Performance

Very Weak

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

Bank BRISyariah Tbk

Risk-Adjusted Performance

Very Weak

Over the last 90 days Bank BRISyariah Tbk 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 April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Tunas Baru and Bank BRISyariah

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

The idea behind Tunas Baru Lampung and Bank BRISyariah 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 Stocks Directory module to find actively traded stocks across global markets.