Correlation Between Volkswagen and Bukit Asam
Can any of the company-specific risk be diversified away by investing in both Volkswagen and Bukit Asam 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 Volkswagen and Bukit Asam into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Volkswagen AG 110 and Bukit Asam Tbk, you can compare the effects of market volatilities on Volkswagen and Bukit Asam 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 Volkswagen with a short position of Bukit Asam. Check out your portfolio center. Please also check ongoing floating volatility patterns of Volkswagen and Bukit Asam.
Diversification Opportunities for Volkswagen and Bukit Asam
-0.41 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Volkswagen and Bukit is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Volkswagen AG 110 and Bukit Asam Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bukit Asam Tbk and Volkswagen 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 Volkswagen AG 110 are associated (or correlated) with Bukit Asam. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bukit Asam Tbk has no effect on the direction of Volkswagen i.e., Volkswagen and Bukit Asam go up and down completely randomly.
Pair Corralation between Volkswagen and Bukit Asam
Assuming the 90 days horizon Volkswagen AG 110 is expected to generate 0.89 times more return on investment than Bukit Asam. However, Volkswagen AG 110 is 1.13 times less risky than Bukit Asam. It trades about -0.25 of its potential returns per unit of risk. Bukit Asam Tbk is currently generating about -0.23 per unit of risk. If you would invest 1,109 in Volkswagen AG 110 on July 30, 2024 and sell it today you would lose (67.00) from holding Volkswagen AG 110 or give up 6.04% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Volkswagen AG 110 vs. Bukit Asam Tbk
Performance |
Timeline |
Volkswagen AG 110 |
Bukit Asam Tbk |
Volkswagen and Bukit Asam Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Volkswagen and Bukit Asam
The main advantage of trading using opposite Volkswagen and Bukit Asam positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Volkswagen position performs unexpectedly, Bukit Asam 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 Bukit Asam will offset losses from the drop in Bukit Asam's long position.Volkswagen vs. Bank Mandiri Persero | Volkswagen vs. Bank Mandiri Persero | Volkswagen vs. PT Bank Rakyat | Volkswagen vs. Telkom Indonesia Tbk |
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Check out your portfolio center.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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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