Correlation Between Bumi Benowo and Indo Kordsa
Can any of the company-specific risk be diversified away by investing in both Bumi Benowo and Indo Kordsa 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 Bumi Benowo and Indo Kordsa into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bumi Benowo Sukses and Indo Kordsa Tbk, you can compare the effects of market volatilities on Bumi Benowo and Indo Kordsa 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 Bumi Benowo with a short position of Indo Kordsa. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bumi Benowo and Indo Kordsa.
Diversification Opportunities for Bumi Benowo and Indo Kordsa
0.06 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Bumi and Indo is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Bumi Benowo Sukses and Indo Kordsa Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Indo Kordsa Tbk and Bumi Benowo 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 Bumi Benowo Sukses are associated (or correlated) with Indo Kordsa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Indo Kordsa Tbk has no effect on the direction of Bumi Benowo i.e., Bumi Benowo and Indo Kordsa go up and down completely randomly.
Pair Corralation between Bumi Benowo and Indo Kordsa
Assuming the 90 days trading horizon Bumi Benowo Sukses is expected to generate 1.37 times more return on investment than Indo Kordsa. However, Bumi Benowo is 1.37 times more volatile than Indo Kordsa Tbk. It trades about 0.05 of its potential returns per unit of risk. Indo Kordsa Tbk is currently generating about 0.03 per unit of risk. If you would invest 19,300 in Bumi Benowo Sukses on August 28, 2024 and sell it today you would earn a total of 900.00 from holding Bumi Benowo Sukses or generate 4.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bumi Benowo Sukses vs. Indo Kordsa Tbk
Performance |
| Timeline |
| Bumi Benowo Sukses |
| Indo Kordsa Tbk |
Bumi Benowo and Indo Kordsa Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bumi Benowo and Indo Kordsa
The main advantage of trading using opposite Bumi Benowo and Indo Kordsa positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bumi Benowo position performs unexpectedly, Indo Kordsa 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 Indo Kordsa will offset losses from the drop in Indo Kordsa's long position.| Bumi Benowo vs. Indo Kordsa Tbk | Bumi Benowo vs. Wilmar Cahaya Indonesia | Bumi Benowo vs. Citra Marga Nusaphala | Bumi Benowo vs. Darya Varia Laboratoria Tbk |
| Indo Kordsa vs. Goodyear Indonesia Tbk | Indo Kordsa vs. Sepatu Bata Tbk | Indo Kordsa vs. Indospring Tbk | Indo Kordsa vs. Ever Shine Textile |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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