Correlation Between Bumi Resources and Matahari Department
Can any of the company-specific risk be diversified away by investing in both Bumi Resources and Matahari Department 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 Matahari Department 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 Matahari Department Store, you can compare the effects of market volatilities on Bumi Resources and Matahari Department 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 Matahari Department. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bumi Resources and Matahari Department.
Diversification Opportunities for Bumi Resources and Matahari Department
-0.74 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Bumi and Matahari is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding Bumi Resources Minerals and Matahari Department Store in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Matahari Department Store 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 Matahari Department. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Matahari Department Store has no effect on the direction of Bumi Resources i.e., Bumi Resources and Matahari Department go up and down completely randomly.
Pair Corralation between Bumi Resources and Matahari Department
Assuming the 90 days trading horizon Bumi Resources Minerals is expected to generate 4.6 times more return on investment than Matahari Department. However, Bumi Resources is 4.6 times more volatile than Matahari Department Store. It trades about 0.05 of its potential returns per unit of risk. Matahari Department Store is currently generating about -0.36 per unit of risk. If you would invest 38,600 in Bumi Resources Minerals on August 31, 2024 and sell it today you would earn a total of 1,000.00 from holding Bumi Resources Minerals or generate 2.59% 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. Matahari Department Store
Performance |
| Timeline |
| Bumi Resources Minerals |
| Matahari Department Store |
Bumi Resources and Matahari Department Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bumi Resources and Matahari Department
The main advantage of trading using opposite Bumi Resources and Matahari Department positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bumi Resources position performs unexpectedly, Matahari Department 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 Matahari Department will offset losses from the drop in Matahari Department's long position.| Bumi Resources vs. Perusahaan Gas Negara | Bumi Resources vs. Vale Indonesia Tbk | Bumi Resources vs. Telkom Indonesia Tbk | Bumi Resources vs. Mitra Pinasthika Mustika |
| Matahari Department vs. Surya Citra Media | Matahari Department vs. Akr Corporindo Tbk | Matahari Department vs. Media Nusantara Citra | Matahari Department vs. Pembangunan Perumahan PT |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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