Correlation Between Cita Mineral and Bumi Resources
Can any of the company-specific risk be diversified away by investing in both Cita Mineral and Bumi Resources 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 Cita Mineral and Bumi Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cita Mineral Investindo and Bumi Resources Minerals, you can compare the effects of market volatilities on Cita Mineral and Bumi Resources 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 Cita Mineral with a short position of Bumi Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cita Mineral and Bumi Resources.
Diversification Opportunities for Cita Mineral and Bumi Resources
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Cita and Bumi is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Cita Mineral Investindo and Bumi Resources Minerals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bumi Resources Minerals and Cita Mineral 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 Cita Mineral Investindo are associated (or correlated) with Bumi Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bumi Resources Minerals has no effect on the direction of Cita Mineral i.e., Cita Mineral and Bumi Resources go up and down completely randomly.
Pair Corralation between Cita Mineral and Bumi Resources
Assuming the 90 days trading horizon Cita Mineral Investindo is expected to generate 0.93 times more return on investment than Bumi Resources. However, Cita Mineral Investindo is 1.07 times less risky than Bumi Resources. It trades about 0.24 of its potential returns per unit of risk. Bumi Resources Minerals is currently generating about 0.12 per unit of risk. If you would invest 263,000 in Cita Mineral Investindo on September 1, 2024 and sell it today you would earn a total of 82,000 from holding Cita Mineral Investindo or generate 31.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Cita Mineral Investindo vs. Bumi Resources Minerals
Performance |
| Timeline |
| Cita Mineral Investindo |
| Bumi Resources Minerals |
Cita Mineral and Bumi Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cita Mineral and Bumi Resources
The main advantage of trading using opposite Cita Mineral and Bumi Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cita Mineral position performs unexpectedly, Bumi Resources 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 Bumi Resources will offset losses from the drop in Bumi Resources' long position.| Cita Mineral vs. Citatah Tbk | Cita Mineral vs. Indo Kordsa Tbk | Cita Mineral vs. Central Omega Resources | Cita Mineral vs. Betonjaya Manunggal Tbk |
| Bumi Resources vs. Energi Mega Persada | Bumi Resources vs. Harum Energy Tbk | Bumi Resources vs. Delta Dunia Makmur | Bumi Resources vs. Benakat Petroleum Energy |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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