Correlation Between Bumi Benowo and Lenox Pasifik
Can any of the company-specific risk be diversified away by investing in both Bumi Benowo and Lenox Pasifik 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 Lenox Pasifik 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 Lenox Pasifik Investama, you can compare the effects of market volatilities on Bumi Benowo and Lenox Pasifik 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 Lenox Pasifik. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bumi Benowo and Lenox Pasifik.
Diversification Opportunities for Bumi Benowo and Lenox Pasifik
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Bumi and Lenox is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Bumi Benowo Sukses and Lenox Pasifik Investama in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lenox Pasifik Investama 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 Lenox Pasifik. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lenox Pasifik Investama has no effect on the direction of Bumi Benowo i.e., Bumi Benowo and Lenox Pasifik go up and down completely randomly.
Pair Corralation between Bumi Benowo and Lenox Pasifik
Assuming the 90 days trading horizon Bumi Benowo Sukses is expected to generate 1.08 times more return on investment than Lenox Pasifik. However, Bumi Benowo is 1.08 times more volatile than Lenox Pasifik Investama. It trades about 0.13 of its potential returns per unit of risk. Lenox Pasifik Investama is currently generating about 0.01 per unit of risk. If you would invest 7,600 in Bumi Benowo Sukses on August 28, 2024 and sell it today you would earn a total of 12,600 from holding Bumi Benowo Sukses or generate 165.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bumi Benowo Sukses vs. Lenox Pasifik Investama
Performance |
| Timeline |
| Bumi Benowo Sukses |
| Lenox Pasifik Investama |
Bumi Benowo and Lenox Pasifik Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bumi Benowo and Lenox Pasifik
The main advantage of trading using opposite Bumi Benowo and Lenox Pasifik positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bumi Benowo position performs unexpectedly, Lenox Pasifik 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 Lenox Pasifik will offset losses from the drop in Lenox Pasifik'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 |
| Lenox Pasifik vs. Star Pacific Tbk | Lenox Pasifik vs. Multipolar Tbk | Lenox Pasifik vs. Lippo General Insurance | Lenox Pasifik vs. Paninvest Tbk |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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