Correlation Between Bumi Resources and Indonesian Paradise
Can any of the company-specific risk be diversified away by investing in both Bumi Resources and Indonesian Paradise 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 Indonesian Paradise 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 Indonesian Paradise Property, you can compare the effects of market volatilities on Bumi Resources and Indonesian Paradise 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 Indonesian Paradise. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bumi Resources and Indonesian Paradise.
Diversification Opportunities for Bumi Resources and Indonesian Paradise
-0.76 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Bumi and Indonesian is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding Bumi Resources Minerals and Indonesian Paradise Property in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Indonesian Paradise 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 Indonesian Paradise. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Indonesian Paradise has no effect on the direction of Bumi Resources i.e., Bumi Resources and Indonesian Paradise go up and down completely randomly.
Pair Corralation between Bumi Resources and Indonesian Paradise
Assuming the 90 days trading horizon Bumi Resources Minerals is expected to generate 1.9 times more return on investment than Indonesian Paradise. However, Bumi Resources is 1.9 times more volatile than Indonesian Paradise Property. It trades about 0.12 of its potential returns per unit of risk. Indonesian Paradise Property is currently generating about -0.15 per unit of risk. If you would invest 37,400 in Bumi Resources Minerals on August 28, 2024 and sell it today you would earn a total of 4,800 from holding Bumi Resources Minerals or generate 12.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bumi Resources Minerals vs. Indonesian Paradise Property
Performance |
| Timeline |
| Bumi Resources Minerals |
| Indonesian Paradise |
Bumi Resources and Indonesian Paradise Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bumi Resources and Indonesian Paradise
The main advantage of trading using opposite Bumi Resources and Indonesian Paradise positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bumi Resources position performs unexpectedly, Indonesian Paradise 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 Indonesian Paradise will offset losses from the drop in Indonesian Paradise'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 |
| Indonesian Paradise vs. Jakarta Setiabudi Internasional | Indonesian Paradise vs. Island Concepts Indonesia | Indonesian Paradise vs. Inter Delta Tbk | Indonesian Paradise vs. Bayu Buana Tbk |
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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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