Correlation Between Bumi Resources and Trimegah Karya
Can any of the company-specific risk be diversified away by investing in both Bumi Resources and Trimegah Karya 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 Trimegah Karya 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 Trimegah Karya Pratama, you can compare the effects of market volatilities on Bumi Resources and Trimegah Karya 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 Trimegah Karya. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bumi Resources and Trimegah Karya.
Diversification Opportunities for Bumi Resources and Trimegah Karya
-0.41 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Bumi and Trimegah is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Bumi Resources Tbk and Trimegah Karya Pratama in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Trimegah Karya Pratama 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 Trimegah Karya. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Trimegah Karya Pratama has no effect on the direction of Bumi Resources i.e., Bumi Resources and Trimegah Karya go up and down completely randomly.
Pair Corralation between Bumi Resources and Trimegah Karya
Assuming the 90 days trading horizon Bumi Resources Tbk is expected to generate 0.85 times more return on investment than Trimegah Karya. However, Bumi Resources Tbk is 1.18 times less risky than Trimegah Karya. It trades about 0.04 of its potential returns per unit of risk. Trimegah Karya Pratama is currently generating about 0.0 per unit of risk. If you would invest 11,400 in Bumi Resources Tbk on September 2, 2024 and sell it today you would earn a total of 3,300 from holding Bumi Resources Tbk or generate 28.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bumi Resources Tbk vs. Trimegah Karya Pratama
Performance |
| Timeline |
| Bumi Resources Tbk |
| Trimegah Karya Pratama |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Bumi Resources and Trimegah Karya Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bumi Resources and Trimegah Karya
The main advantage of trading using opposite Bumi Resources and Trimegah Karya positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bumi Resources position performs unexpectedly, Trimegah Karya 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 Trimegah Karya will offset losses from the drop in Trimegah Karya's long position.| Bumi Resources vs. Aneka Tambang Persero | Bumi Resources vs. Timah Persero Tbk | Bumi Resources vs. Vale Indonesia Tbk | Bumi Resources vs. Energi Mega Persada |
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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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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