Correlation Between Nusantara Almazia and Bumi Benowo
Can any of the company-specific risk be diversified away by investing in both Nusantara Almazia and Bumi Benowo 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 Nusantara Almazia and Bumi Benowo into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nusantara Almazia and Bumi Benowo Sukses, you can compare the effects of market volatilities on Nusantara Almazia and Bumi Benowo 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 Nusantara Almazia with a short position of Bumi Benowo. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nusantara Almazia and Bumi Benowo.
Diversification Opportunities for Nusantara Almazia and Bumi Benowo
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Nusantara and Bumi is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Nusantara Almazia and Bumi Benowo Sukses in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bumi Benowo Sukses and Nusantara Almazia 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 Nusantara Almazia are associated (or correlated) with Bumi Benowo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bumi Benowo Sukses has no effect on the direction of Nusantara Almazia i.e., Nusantara Almazia and Bumi Benowo go up and down completely randomly.
Pair Corralation between Nusantara Almazia and Bumi Benowo
Assuming the 90 days trading horizon Nusantara Almazia is expected to generate 2.33 times more return on investment than Bumi Benowo. However, Nusantara Almazia is 2.33 times more volatile than Bumi Benowo Sukses. It trades about 0.02 of its potential returns per unit of risk. Bumi Benowo Sukses is currently generating about -0.11 per unit of risk. If you would invest 8,200 in Nusantara Almazia on August 28, 2024 and sell it today you would lose (300.00) from holding Nusantara Almazia or give up 3.66% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Nusantara Almazia vs. Bumi Benowo Sukses
Performance |
| Timeline |
| Nusantara Almazia |
| Bumi Benowo Sukses |
Nusantara Almazia and Bumi Benowo Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nusantara Almazia and Bumi Benowo
The main advantage of trading using opposite Nusantara Almazia and Bumi Benowo positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nusantara Almazia position performs unexpectedly, Bumi Benowo 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 Benowo will offset losses from the drop in Bumi Benowo's long position.| Nusantara Almazia vs. Bumi Benowo Sukses | Nusantara Almazia vs. Andalan Sakti Primaindo | Nusantara Almazia vs. Bhakti Multi Artha | Nusantara Almazia vs. Greenwood Sejahtera Tbk |
| Bumi Benowo vs. Indo Kordsa Tbk | Bumi Benowo vs. Wilmar Cahaya Indonesia | Bumi Benowo vs. Citra Marga Nusaphala | Bumi Benowo vs. Darya Varia Laboratoria 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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