Correlation Between Bank Bumi and Singaraja Putra
Can any of the company-specific risk be diversified away by investing in both Bank Bumi and Singaraja Putra 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 Singaraja Putra 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 Singaraja Putra, you can compare the effects of market volatilities on Bank Bumi and Singaraja Putra 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 Singaraja Putra. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank Bumi and Singaraja Putra.
Diversification Opportunities for Bank Bumi and Singaraja Putra
-0.37 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Bank and Singaraja is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Bank Bumi Arta and Singaraja Putra in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Singaraja Putra 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 Singaraja Putra. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Singaraja Putra has no effect on the direction of Bank Bumi i.e., Bank Bumi and Singaraja Putra go up and down completely randomly.
Pair Corralation between Bank Bumi and Singaraja Putra
Assuming the 90 days trading horizon Bank Bumi is expected to generate 11.88 times less return on investment than Singaraja Putra. But when comparing it to its historical volatility, Bank Bumi Arta is 1.94 times less risky than Singaraja Putra. It trades about 0.03 of its potential returns per unit of risk. Singaraja Putra is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest 83,500 in Singaraja Putra on August 27, 2024 and sell it today you would earn a total of 334,500 from holding Singaraja Putra or generate 400.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bank Bumi Arta vs. Singaraja Putra
Performance |
| Timeline |
| Bank Bumi Arta |
| Singaraja Putra |
Bank Bumi and Singaraja Putra Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank Bumi and Singaraja Putra
The main advantage of trading using opposite Bank Bumi and Singaraja Putra positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank Bumi position performs unexpectedly, Singaraja Putra 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 Singaraja Putra will offset losses from the drop in Singaraja Putra's long position.The idea behind Bank Bumi Arta and Singaraja Putra pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Singaraja Putra vs. Nusantara Almazia | Singaraja Putra vs. Gaya Abadi Sempurna | Singaraja Putra vs. Kencana Energi Lestari | Singaraja Putra vs. Cahayaputra Asa Keramik |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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