Correlation Between Bumi Resources and Petrosea Tbk
Can any of the company-specific risk be diversified away by investing in both Bumi Resources and Petrosea Tbk 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 Petrosea Tbk 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 Petrosea Tbk, you can compare the effects of market volatilities on Bumi Resources and Petrosea Tbk 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 Petrosea Tbk. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bumi Resources and Petrosea Tbk.
Diversification Opportunities for Bumi Resources and Petrosea Tbk
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Bumi and Petrosea is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Bumi Resources Tbk and Petrosea Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Petrosea Tbk 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 Petrosea Tbk. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Petrosea Tbk has no effect on the direction of Bumi Resources i.e., Bumi Resources and Petrosea Tbk go up and down completely randomly.
Pair Corralation between Bumi Resources and Petrosea Tbk
Assuming the 90 days trading horizon Bumi Resources is expected to generate 32.01 times less return on investment than Petrosea Tbk. But when comparing it to its historical volatility, Bumi Resources Tbk is 1.35 times less risky than Petrosea Tbk. It trades about 0.0 of its potential returns per unit of risk. Petrosea Tbk is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 369,995 in Petrosea Tbk on August 24, 2024 and sell it today you would earn a total of 1,532,505 from holding Petrosea Tbk or generate 414.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.79% |
| Values | Daily Returns |
Bumi Resources Tbk vs. Petrosea Tbk
Performance |
| Timeline |
| Bumi Resources Tbk |
| Petrosea Tbk |
Bumi Resources and Petrosea Tbk Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bumi Resources and Petrosea Tbk
The main advantage of trading using opposite Bumi Resources and Petrosea Tbk positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bumi Resources position performs unexpectedly, Petrosea Tbk 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 Petrosea Tbk will offset losses from the drop in Petrosea Tbk's long position.| Bumi Resources vs. Petrosea Tbk | Bumi Resources vs. Harum Energy Tbk | Bumi Resources vs. Perdana Karya Perkasa | Bumi Resources vs. Samindo Resources Tbk |
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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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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