Correlation Between Bumi Resources and Ladangbaja Murni
Can any of the company-specific risk be diversified away by investing in both Bumi Resources and Ladangbaja Murni 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 Ladangbaja Murni 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 Ladangbaja Murni PT, you can compare the effects of market volatilities on Bumi Resources and Ladangbaja Murni 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 Ladangbaja Murni. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bumi Resources and Ladangbaja Murni.
Diversification Opportunities for Bumi Resources and Ladangbaja Murni
-0.75 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Bumi and Ladangbaja is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding Bumi Resources Tbk and Ladangbaja Murni PT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ladangbaja Murni 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 Ladangbaja Murni. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ladangbaja Murni has no effect on the direction of Bumi Resources i.e., Bumi Resources and Ladangbaja Murni go up and down completely randomly.
Pair Corralation between Bumi Resources and Ladangbaja Murni
Assuming the 90 days trading horizon Bumi Resources Tbk is expected to generate 1.34 times more return on investment than Ladangbaja Murni. However, Bumi Resources is 1.34 times more volatile than Ladangbaja Murni PT. It trades about 0.07 of its potential returns per unit of risk. Ladangbaja Murni PT is currently generating about -0.27 per unit of risk. If you would invest 13,900 in Bumi Resources Tbk on September 1, 2024 and sell it today you would earn a total of 800.00 from holding Bumi Resources Tbk or generate 5.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bumi Resources Tbk vs. Ladangbaja Murni PT
Performance |
| Timeline |
| Bumi Resources Tbk |
| Ladangbaja Murni |
Bumi Resources and Ladangbaja Murni Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bumi Resources and Ladangbaja Murni
The main advantage of trading using opposite Bumi Resources and Ladangbaja Murni positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bumi Resources position performs unexpectedly, Ladangbaja Murni 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 Ladangbaja Murni will offset losses from the drop in Ladangbaja Murni's long position.| Bumi Resources vs. Mitrabahtera Segara Sejati | Bumi Resources vs. Weha Transportasi Indonesia | Bumi Resources vs. Rig Tenders Tbk | Bumi Resources vs. Rukun Raharja Tbk |
| Ladangbaja Murni vs. PAM Mineral Tbk | Ladangbaja Murni vs. Nusa Palapa Gemilang | Ladangbaja Murni vs. Diagnos Laboratorium Utama | Ladangbaja Murni vs. PT Sunter Lakeside |
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.
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