Correlation Between Delta Dunia and Bumi Resources
Can any of the company-specific risk be diversified away by investing in both Delta Dunia 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 Delta Dunia and Bumi Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Delta Dunia Makmur and Bumi Resources Tbk, you can compare the effects of market volatilities on Delta Dunia 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 Delta Dunia with a short position of Bumi Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Delta Dunia and Bumi Resources.
Diversification Opportunities for Delta Dunia and Bumi Resources
-0.39 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Delta and Bumi is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Delta Dunia Makmur and Bumi Resources Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bumi Resources Tbk and Delta Dunia 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 Delta Dunia Makmur 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 Tbk has no effect on the direction of Delta Dunia i.e., Delta Dunia and Bumi Resources go up and down completely randomly.
Pair Corralation between Delta Dunia and Bumi Resources
Assuming the 90 days trading horizon Delta Dunia Makmur is expected to generate 0.73 times more return on investment than Bumi Resources. However, Delta Dunia Makmur is 1.36 times less risky than Bumi Resources. It trades about 0.11 of its potential returns per unit of risk. Bumi Resources Tbk is currently generating about 0.05 per unit of risk. If you would invest 34,278 in Delta Dunia Makmur on August 24, 2024 and sell it today you would earn a total of 30,722 from holding Delta Dunia Makmur or generate 89.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Delta Dunia Makmur vs. Bumi Resources Tbk
Performance |
| Timeline |
| Delta Dunia Makmur |
| Bumi Resources Tbk |
Delta Dunia and Bumi Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Delta Dunia and Bumi Resources
The main advantage of trading using opposite Delta Dunia and Bumi Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Delta Dunia 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.| Delta Dunia vs. Bakrieland Development Tbk | Delta Dunia vs. Bakrie Sumatera Plantations | Delta Dunia vs. Bakrie Brothers Tbk | Delta Dunia vs. Darma Henwa Tbk |
| Bumi Resources vs. Bakrieland Development Tbk | Bumi Resources vs. Bakrie Sumatera Plantations | Bumi Resources vs. Bakrie Brothers Tbk | Bumi Resources 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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