Correlation Between Adaro Energy and PT Bumi
Can any of the company-specific risk be diversified away by investing in both Adaro Energy and PT Bumi 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 Adaro Energy and PT Bumi into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Adaro Energy Tbk and PT Bumi Resources, you can compare the effects of market volatilities on Adaro Energy and PT Bumi 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 Adaro Energy with a short position of PT Bumi. Check out your portfolio center. Please also check ongoing floating volatility patterns of Adaro Energy and PT Bumi.
Diversification Opportunities for Adaro Energy and PT Bumi
-0.37 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Adaro and PBMRF is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Adaro Energy Tbk and PT Bumi Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PT Bumi Resources and Adaro Energy 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 Adaro Energy Tbk are associated (or correlated) with PT Bumi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PT Bumi Resources has no effect on the direction of Adaro Energy i.e., Adaro Energy and PT Bumi go up and down completely randomly.
Pair Corralation between Adaro Energy and PT Bumi
If you would invest 0.60 in PT Bumi Resources on August 31, 2024 and sell it today you would earn a total of 0.00 from holding PT Bumi Resources or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Adaro Energy Tbk vs. PT Bumi Resources
Performance |
| Timeline |
| Adaro Energy Tbk |
| PT Bumi Resources |
Adaro Energy and PT Bumi Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Adaro Energy and PT Bumi
The main advantage of trading using opposite Adaro Energy and PT Bumi positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Adaro Energy position performs unexpectedly, PT Bumi 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 PT Bumi will offset losses from the drop in PT Bumi's long position.| Adaro Energy vs. Thungela Resources Limited | Adaro Energy vs. Geo Energy Resources | Adaro Energy vs. Bukit Asam Tbk | Adaro Energy vs. China Shenhua Energy |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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