Correlation Between Steel Pipe and Bumi Resources
Can any of the company-specific risk be diversified away by investing in both Steel Pipe 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 Steel Pipe and Bumi Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Steel Pipe Industry and Bumi Resources Minerals, you can compare the effects of market volatilities on Steel Pipe 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 Steel Pipe with a short position of Bumi Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Steel Pipe and Bumi Resources.
Diversification Opportunities for Steel Pipe and Bumi Resources
-0.7 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Steel and Bumi is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Steel Pipe Industry 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 Steel Pipe 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 Steel Pipe Industry 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 Steel Pipe i.e., Steel Pipe and Bumi Resources go up and down completely randomly.
Pair Corralation between Steel Pipe and Bumi Resources
Assuming the 90 days trading horizon Steel Pipe Industry is expected to under-perform the Bumi Resources. But the stock apears to be less risky and, when comparing its historical volatility, Steel Pipe Industry is 7.72 times less risky than Bumi Resources. The stock trades about -0.44 of its potential returns per unit of risk. The Bumi Resources Minerals is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 37,400 in Bumi Resources Minerals on August 27, 2024 and sell it today you would earn a total of 6,800 from holding Bumi Resources Minerals or generate 18.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Steel Pipe Industry vs. Bumi Resources Minerals
Performance |
| Timeline |
| Steel Pipe Industry |
| Bumi Resources Minerals |
Steel Pipe and Bumi Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Steel Pipe and Bumi Resources
The main advantage of trading using opposite Steel Pipe and Bumi Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Steel Pipe 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.| Steel Pipe vs. Semen Baturaja Persero | Steel Pipe vs. Bekasi Fajar Industrial | Steel Pipe vs. Krakatau Steel Persero | Steel Pipe vs. Saranacentral Bajatama 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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