Correlation Between Benakat Petroleum and Bumi Resources
Can any of the company-specific risk be diversified away by investing in both Benakat Petroleum and Bumi Resources 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 Benakat Petroleum and Bumi Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Benakat Petroleum Energy and Bumi Resources Minerals, you can compare the effects of market volatilities on Benakat Petroleum and Bumi Resources 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 Benakat Petroleum with a short position of Bumi Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Benakat Petroleum and Bumi Resources.
Diversification Opportunities for Benakat Petroleum and Bumi Resources
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Benakat and Bumi is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Benakat Petroleum Energy and Bumi Resources Minerals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bumi Resources Minerals and Benakat Petroleum 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 Benakat Petroleum Energy are associated (or correlated) with Bumi Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bumi Resources Minerals has no effect on the direction of Benakat Petroleum i.e., Benakat Petroleum and Bumi Resources go up and down completely randomly.
Pair Corralation between Benakat Petroleum and Bumi Resources
Assuming the 90 days trading horizon Benakat Petroleum Energy is expected to under-perform the Bumi Resources. In addition to that, Benakat Petroleum is 1.08 times more volatile than Bumi Resources Minerals. It trades about -0.04 of its total potential returns per unit of risk. Bumi Resources Minerals is currently generating about 0.07 per unit of volatility. If you would invest 17,400 in Bumi Resources Minerals on August 29, 2024 and sell it today you would earn a total of 23,600 from holding Bumi Resources Minerals or generate 135.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Benakat Petroleum Energy vs. Bumi Resources Minerals
Performance |
| Timeline |
| Benakat Petroleum Energy |
| Bumi Resources Minerals |
Benakat Petroleum and Bumi Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Benakat Petroleum and Bumi Resources
The main advantage of trading using opposite Benakat Petroleum and Bumi Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Benakat Petroleum position performs unexpectedly, Bumi Resources 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 Bumi Resources will offset losses from the drop in Bumi Resources' long position.| Benakat Petroleum vs. Bumi Resources Minerals | Benakat Petroleum vs. Energi Mega Persada | Benakat Petroleum vs. Delta Dunia Makmur | Benakat Petroleum vs. Darma Henwa Tbk |
| Bumi Resources vs. Energi Mega Persada | Bumi Resources vs. Harum Energy Tbk | Bumi Resources vs. Delta Dunia Makmur | Bumi Resources vs. Benakat Petroleum 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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