Correlation Between DAX Index and PT Bumi

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both DAX Index and PT Bumi 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 DAX Index and PT Bumi into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between DAX Index and PT Bumi Resources, you can compare the effects of market volatilities on DAX Index and PT Bumi 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 DAX Index with a short position of PT Bumi. Check out your portfolio center. Please also check ongoing floating volatility patterns of DAX Index and PT Bumi.

Diversification Opportunities for DAX Index and PT Bumi

0.74
  Correlation Coefficient

Poor diversification

The 3 months correlation between DAX and PJM is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding DAX Index and PT Bumi Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PT Bumi Resources and DAX Index 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 DAX Index are associated (or correlated) with PT Bumi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PT Bumi Resources has no effect on the direction of DAX Index i.e., DAX Index and PT Bumi go up and down completely randomly.
    Optimize

Pair Corralation between DAX Index and PT Bumi

Assuming the 90 days trading horizon DAX Index is expected to generate 2.94 times less return on investment than PT Bumi. But when comparing it to its historical volatility, DAX Index is 8.26 times less risky than PT Bumi. It trades about 0.08 of its potential returns per unit of risk. PT Bumi Resources is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  0.95  in PT Bumi Resources on September 3, 2024 and sell it today you would lose (0.15) from holding PT Bumi Resources or give up 15.79% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

DAX Index  vs.  PT Bumi Resources

 Performance 
       Timeline  

DAX Index and PT Bumi Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with DAX Index and PT Bumi

The main advantage of trading using opposite DAX Index and PT Bumi positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DAX Index position performs unexpectedly, PT Bumi 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 PT Bumi will offset losses from the drop in PT Bumi's long position.
DAX Index vs. SPORT LISBOA E
DAX Index vs. FUYO GENERAL LEASE
DAX Index vs. Live Nation Entertainment
DAX Index vs. Transport International Holdings
The idea behind DAX Index and PT Bumi Resources pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
PT Bumi vs. National Health Investors
PT Bumi vs. Bumrungrad Hospital Public
PT Bumi vs. SMA Solar Technology
PT Bumi vs. MACOM Technology Solutions
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.

Other Complementary Tools

Idea Breakdown
Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes
Technical Analysis
Check basic technical indicators and analysis based on most latest market data
Top Crypto Exchanges
Search and analyze digital assets across top global cryptocurrency exchanges
My Watchlist Analysis
Analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like
Portfolio Center
All portfolio management and optimization tools to improve performance of your portfolios


 
Macroaxis helps investors of all levels and skills to maximize the upside of all their holdings and minimize the risk associated with market volatility, economic swings, and company-specific events. View terms and conditions
 
Feedback Blog
Made with optimal in San Francisco
2024 Macroaxis LLC
COMMON DESTINATIONS
MAIN CATEGORIES
COMPANY