Correlation Between PT Barito and VOLVO B

Can any of the company-specific risk be diversified away by investing in both PT Barito and VOLVO B 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 VOLVO B 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 VOLVO B UNSPADR, you can compare the effects of market volatilities on PT Barito and VOLVO B 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 VOLVO B. Check out your portfolio center. Please also check ongoing floating volatility patterns of PT Barito and VOLVO B.

Diversification Opportunities for PT Barito and VOLVO B

-0.08

Correlation Coefficient

PT Barito  VOLVO B

Good diversification

The 3 months correlation between OB8 and VOLVO is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding PT Barito Pacific and VOLVO B UNSPADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VOLVO B UNSPADR 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 VOLVO B. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VOLVO B UNSPADR has no effect on the direction of PT Barito i.e., PT Barito and VOLVO B go up and down completely randomly.

Pair Corralation between PT Barito and VOLVO B

Assuming the 90 days horizon PT Barito Pacific is expected to generate 5.37 times more return on investment than VOLVO B. However, PT Barito is 5.37 times more volatile than VOLVO B UNSPADR. It trades about 0.24 of its potential returns per unit of risk. VOLVO B UNSPADR is currently generating about 0.02 per unit of risk. If you would invest  3.00  in PT Barito Pacific on April 21, 2025 and sell it today you would earn a total of  8.00  from holding PT Barito Pacific or generate 266.67% return on investment over 90 days.

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

PT Barito Pacific  vs.  VOLVO B UNSPADR

PT Barito Pacific

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in PT Barito Pacific are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, PT Barito reported solid returns over the last few months and may actually be approaching a breakup point.

VOLVO B UNSPADR

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in VOLVO B UNSPADR are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable essential indicators, VOLVO B is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with PT Barito and VOLVO B

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

The idea behind PT Barito Pacific and VOLVO B UNSPADR 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.