Correlation Between Kedaung Indah and Bumi Resources
Can any of the company-specific risk be diversified away by investing in both Kedaung Indah 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 Kedaung Indah and Bumi Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kedaung Indah Can and Bumi Resources Minerals, you can compare the effects of market volatilities on Kedaung Indah 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 Kedaung Indah with a short position of Bumi Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kedaung Indah and Bumi Resources.
Diversification Opportunities for Kedaung Indah and Bumi Resources
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Kedaung and Bumi is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Kedaung Indah Can 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 Kedaung Indah 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 Kedaung Indah Can 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 Kedaung Indah i.e., Kedaung Indah and Bumi Resources go up and down completely randomly.
Pair Corralation between Kedaung Indah and Bumi Resources
Assuming the 90 days trading horizon Kedaung Indah is expected to generate 7.44 times less return on investment than Bumi Resources. In addition to that, Kedaung Indah is 1.43 times more volatile than Bumi Resources Minerals. It trades about 0.01 of its total potential returns per unit of risk. Bumi Resources Minerals is currently generating about 0.07 per unit of volatility. If you would invest 15,800 in Bumi Resources Minerals on January 21, 2025 and sell it today you would earn a total of 21,000 from holding Bumi Resources Minerals or generate 132.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.79% |
| Values | Daily Returns |
Kedaung Indah Can vs. Bumi Resources Minerals
Performance |
| Timeline |
| Kedaung Indah Can |
| Bumi Resources Minerals |
Kedaung Indah and Bumi Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kedaung Indah and Bumi Resources
The main advantage of trading using opposite Kedaung Indah and Bumi Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kedaung Indah 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.| Kedaung Indah vs. Langgeng Makmur Industri | Kedaung Indah vs. Kedawung Setia Industrial | Kedaung Indah vs. Mustika Ratu Tbk | Kedaung Indah vs. Kabelindo Murni Tbk |
| Bumi Resources vs. Betonjaya Manunggal Tbk | Bumi Resources vs. Lotte Chemical Titan | Bumi Resources vs. Saranacentral Bajatama Tbk | Bumi Resources vs. Pelat Timah Nusantara |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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