Correlation Between Bumi Benowo and Pudjiadi Prestige
Can any of the company-specific risk be diversified away by investing in both Bumi Benowo and Pudjiadi Prestige 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 Pudjiadi Prestige 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 Pudjiadi Prestige Tbk, you can compare the effects of market volatilities on Bumi Benowo and Pudjiadi Prestige 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 Pudjiadi Prestige. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bumi Benowo and Pudjiadi Prestige.
Diversification Opportunities for Bumi Benowo and Pudjiadi Prestige
-0.42 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Bumi and Pudjiadi is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Bumi Benowo Sukses and Pudjiadi Prestige Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pudjiadi Prestige 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 Pudjiadi Prestige. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pudjiadi Prestige Tbk has no effect on the direction of Bumi Benowo i.e., Bumi Benowo and Pudjiadi Prestige go up and down completely randomly.
Pair Corralation between Bumi Benowo and Pudjiadi Prestige
Assuming the 90 days trading horizon Bumi Benowo Sukses is expected to under-perform the Pudjiadi Prestige. But the stock apears to be less risky and, when comparing its historical volatility, Bumi Benowo Sukses is 3.09 times less risky than Pudjiadi Prestige. The stock trades about -0.13 of its potential returns per unit of risk. The Pudjiadi Prestige Tbk is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 21,800 in Pudjiadi Prestige Tbk on August 29, 2024 and sell it today you would earn a total of 4,800 from holding Pudjiadi Prestige Tbk or generate 22.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bumi Benowo Sukses vs. Pudjiadi Prestige Tbk
Performance |
| Timeline |
| Bumi Benowo Sukses |
| Pudjiadi Prestige Tbk |
Bumi Benowo and Pudjiadi Prestige Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bumi Benowo and Pudjiadi Prestige
The main advantage of trading using opposite Bumi Benowo and Pudjiadi Prestige positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bumi Benowo position performs unexpectedly, Pudjiadi Prestige 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 Pudjiadi Prestige will offset losses from the drop in Pudjiadi Prestige'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 |
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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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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