Correlation Between TBS Energi and Baramulti Suksessarana

Can any of the company-specific risk be diversified away by investing in both TBS Energi and Baramulti Suksessarana 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 TBS Energi and Baramulti Suksessarana into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between TBS Energi Utama and Baramulti Suksessarana Tbk, you can compare the effects of market volatilities on TBS Energi and Baramulti Suksessarana 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 TBS Energi with a short position of Baramulti Suksessarana. Check out your portfolio center. Please also check ongoing floating volatility patterns of TBS Energi and Baramulti Suksessarana.

Diversification Opportunities for TBS Energi and Baramulti Suksessarana

-0.05

Correlation Coefficient

TBS Energi  Baramulti Suksessarana

Good diversification

The 3 months correlation between TBS and Baramulti is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding TBS Energi Utama and Baramulti Suksessarana Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Baramulti Suksessarana and TBS Energi 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 TBS Energi Utama are associated (or correlated) with Baramulti Suksessarana. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Baramulti Suksessarana has no effect on the direction of TBS Energi i.e., TBS Energi and Baramulti Suksessarana go up and down completely randomly.

Pair Corralation between TBS Energi and Baramulti Suksessarana

Assuming the 90 days trading horizon TBS Energi Utama is expected to generate 4.36 times more return on investment than Baramulti Suksessarana. However, TBS Energi is 4.36 times more volatile than Baramulti Suksessarana Tbk. It trades about 0.01 of its potential returns per unit of risk. Baramulti Suksessarana Tbk is currently generating about -0.17 per unit of risk. If you would invest  46,800  in TBS Energi Utama on September 1, 2024 and sell it today you would lose (2,200) from holding TBS Energi Utama or give up 4.7% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

TBS Energi Utama  vs.  Baramulti Suksessarana Tbk

TBS Energi Utama

Risk-Adjusted Performance

0 of 100

Very Weak

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

Baramulti Suksessarana

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Baramulti Suksessarana 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 December 2024. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with TBS Energi and Baramulti Suksessarana

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

The idea behind TBS Energi Utama and Baramulti Suksessarana 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.