Correlation Between Bumi Resources and Benakat Petroleum
Can any of the company-specific risk be diversified away by investing in both Bumi Resources and Benakat Petroleum 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 Benakat Petroleum into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bumi Resources Tbk and Benakat Petroleum Energy, you can compare the effects of market volatilities on Bumi Resources and Benakat Petroleum 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 Benakat Petroleum. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bumi Resources and Benakat Petroleum.
Diversification Opportunities for Bumi Resources and Benakat Petroleum
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Bumi and Benakat is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Bumi Resources Tbk and Benakat Petroleum Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Benakat Petroleum Energy 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 Tbk are associated (or correlated) with Benakat Petroleum. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Benakat Petroleum Energy has no effect on the direction of Bumi Resources i.e., Bumi Resources and Benakat Petroleum go up and down completely randomly.
Pair Corralation between Bumi Resources and Benakat Petroleum
Assuming the 90 days trading horizon Bumi Resources Tbk is expected to generate 0.9 times more return on investment than Benakat Petroleum. However, Bumi Resources Tbk is 1.11 times less risky than Benakat Petroleum. It trades about 0.1 of its potential returns per unit of risk. Benakat Petroleum Energy is currently generating about 0.01 per unit of risk. If you would invest 9,200 in Bumi Resources Tbk on August 24, 2024 and sell it today you would earn a total of 5,100 from holding Bumi Resources Tbk or generate 55.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bumi Resources Tbk vs. Benakat Petroleum Energy
Performance |
| Timeline |
| Bumi Resources Tbk |
| Benakat Petroleum Energy |
Bumi Resources and Benakat Petroleum Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bumi Resources and Benakat Petroleum
The main advantage of trading using opposite Bumi Resources and Benakat Petroleum positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bumi Resources position performs unexpectedly, Benakat Petroleum 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 Benakat Petroleum will offset losses from the drop in Benakat Petroleum's long position.| Bumi Resources vs. Bakrieland Development Tbk | Bumi Resources vs. Bakrie Sumatera Plantations | Bumi Resources vs. Bakrie Brothers Tbk | Bumi Resources vs. Darma Henwa Tbk |
| Benakat Petroleum vs. Bakrieland Development Tbk | Benakat Petroleum vs. Bakrie Sumatera Plantations | Benakat Petroleum vs. Bakrie Brothers Tbk | Benakat Petroleum vs. Darma Henwa 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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