Correlation Between Bank Bumi and Buana Finance
Can any of the company-specific risk be diversified away by investing in both Bank Bumi and Buana Finance 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 Bank Bumi and Buana Finance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bank Bumi Arta and Buana Finance Tbk, you can compare the effects of market volatilities on Bank Bumi and Buana Finance 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 Bank Bumi with a short position of Buana Finance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank Bumi and Buana Finance.
Diversification Opportunities for Bank Bumi and Buana Finance
-0.03 | Correlation Coefficient |
Good diversification
The 3 months correlation between Bank and Buana is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Bank Bumi Arta and Buana Finance Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Buana Finance Tbk and Bank Bumi 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 Bank Bumi Arta are associated (or correlated) with Buana Finance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Buana Finance Tbk has no effect on the direction of Bank Bumi i.e., Bank Bumi and Buana Finance go up and down completely randomly.
Pair Corralation between Bank Bumi and Buana Finance
Assuming the 90 days trading horizon Bank Bumi Arta is expected to under-perform the Buana Finance. In addition to that, Bank Bumi is 1.05 times more volatile than Buana Finance Tbk. It trades about -0.1 of its total potential returns per unit of risk. Buana Finance Tbk is currently generating about -0.08 per unit of volatility. If you would invest 69,000 in Buana Finance Tbk on August 31, 2024 and sell it today you would lose (3,000) from holding Buana Finance Tbk or give up 4.35% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bank Bumi Arta vs. Buana Finance Tbk
Performance |
| Timeline |
| Bank Bumi Arta |
| Buana Finance Tbk |
Bank Bumi and Buana Finance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank Bumi and Buana Finance
The main advantage of trading using opposite Bank Bumi and Buana Finance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank Bumi position performs unexpectedly, Buana Finance 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 Buana Finance will offset losses from the drop in Buana Finance's long position.| Bank Bumi vs. Bank BRISyariah Tbk | Bank Bumi vs. Ace Hardware Indonesia | Bank Bumi vs. Merdeka Copper Gold | Bank Bumi vs. Mitra Pinasthika Mustika |
| Buana Finance vs. Bank BRISyariah Tbk | Buana Finance vs. Ace Hardware Indonesia | Buana Finance vs. Merdeka Copper Gold | Buana Finance vs. Mitra Pinasthika Mustika |
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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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