Correlation Between Bumi Resources and Asia Pacific
Can any of the company-specific risk be diversified away by investing in both Bumi Resources and Asia Pacific 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 Asia Pacific 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 Asia Pacific Fibers, you can compare the effects of market volatilities on Bumi Resources and Asia Pacific 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 Asia Pacific. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bumi Resources and Asia Pacific.
Diversification Opportunities for Bumi Resources and Asia Pacific
-0.94 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Bumi and Asia is -0.94. Overlapping area represents the amount of risk that can be diversified away by holding Bumi Resources Minerals and Asia Pacific Fibers in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Asia Pacific Fibers 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 Asia Pacific. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Asia Pacific Fibers has no effect on the direction of Bumi Resources i.e., Bumi Resources and Asia Pacific go up and down completely randomly.
Pair Corralation between Bumi Resources and Asia Pacific
Assuming the 90 days trading horizon Bumi Resources Minerals is expected to generate 1.47 times more return on investment than Asia Pacific. However, Bumi Resources is 1.47 times more volatile than Asia Pacific Fibers. It trades about 0.12 of its potential returns per unit of risk. Asia Pacific Fibers is currently generating about 0.08 per unit of risk. If you would invest 36,800 in Bumi Resources Minerals on September 1, 2024 and sell it today you would earn a total of 4,600 from holding Bumi Resources Minerals or generate 12.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bumi Resources Minerals vs. Asia Pacific Fibers
Performance |
| Timeline |
| Bumi Resources Minerals |
| Asia Pacific Fibers |
Bumi Resources and Asia Pacific Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bumi Resources and Asia Pacific
The main advantage of trading using opposite Bumi Resources and Asia Pacific positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bumi Resources position performs unexpectedly, Asia Pacific 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 Asia Pacific will offset losses from the drop in Asia Pacific'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 |
| Asia Pacific vs. Japfa Comfeed Indonesia | Asia Pacific vs. Charoen Pokphand Indonesia | Asia Pacific vs. Erajaya Swasembada Tbk | Asia Pacific vs. Indofood Cbp Sukses |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
Other Complementary Tools
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated | |
| Fundamental Analysis View fundamental data based on most recent published financial statements | |
| Stocks Directory Find actively traded stocks across global markets | |
| Price Ceiling Movement Calculate and plot Price Ceiling Movement for different equity instruments | |
| Stock Tickers Use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites |