Correlation Between Bumi Resources and Darma Henwa
Can any of the company-specific risk be diversified away by investing in both Bumi Resources and Darma Henwa 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 Resources and Darma Henwa into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bumi Resources Minerals and Darma Henwa Tbk, you can compare the effects of market volatilities on Bumi Resources and Darma Henwa 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 Resources with a short position of Darma Henwa. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bumi Resources and Darma Henwa.
Diversification Opportunities for Bumi Resources and Darma Henwa
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Bumi and Darma is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Bumi Resources Minerals and Darma Henwa Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Darma Henwa Tbk and Bumi Resources 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 Resources Minerals are associated (or correlated) with Darma Henwa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Darma Henwa Tbk has no effect on the direction of Bumi Resources i.e., Bumi Resources and Darma Henwa go up and down completely randomly.
Pair Corralation between Bumi Resources and Darma Henwa
Assuming the 90 days trading horizon Bumi Resources is expected to generate 1.08 times less return on investment than Darma Henwa. But when comparing it to its historical volatility, Bumi Resources Minerals is 1.07 times less risky than Darma Henwa. It trades about 0.12 of its potential returns per unit of risk. Darma Henwa Tbk is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 9,300 in Darma Henwa Tbk on September 1, 2024 and sell it today you would earn a total of 1,300 from holding Darma Henwa Tbk or generate 13.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 95.45% |
| Values | Daily Returns |
Bumi Resources Minerals vs. Darma Henwa Tbk
Performance |
| Timeline |
| Bumi Resources Minerals |
| Darma Henwa Tbk |
Bumi Resources and Darma Henwa Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bumi Resources and Darma Henwa
The main advantage of trading using opposite Bumi Resources and Darma Henwa positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bumi Resources position performs unexpectedly, Darma Henwa 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 Darma Henwa will offset losses from the drop in Darma Henwa's long position.| Bumi Resources vs. Energi Mega Persada | Bumi Resources vs. Harum Energy Tbk | Bumi Resources vs. Delta Dunia Makmur | Bumi Resources vs. Benakat Petroleum Energy |
| Darma Henwa vs. Bakrieland Development Tbk | Darma Henwa vs. Energi Mega Persada | Darma Henwa vs. Bakrie Brothers Tbk | Darma Henwa vs. Bakrie Sumatera Plantations |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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