Correlation Between New HopeLimited and PT Bumi
Can any of the company-specific risk be diversified away by investing in both New HopeLimited 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 New HopeLimited and PT Bumi into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between New Hope and PT Bumi Resources, you can compare the effects of market volatilities on New HopeLimited 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 New HopeLimited with a short position of PT Bumi. Check out your portfolio center. Please also check ongoing floating volatility patterns of New HopeLimited and PT Bumi.
Diversification Opportunities for New HopeLimited and PT Bumi
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between New and PJM is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding New Hope 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 New HopeLimited 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 New Hope 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 New HopeLimited i.e., New HopeLimited and PT Bumi go up and down completely randomly.
Pair Corralation between New HopeLimited and PT Bumi
Assuming the 90 days horizon New HopeLimited is expected to generate 42.93 times less return on investment than PT Bumi. But when comparing it to its historical volatility, New Hope is 2.3 times less risky than PT Bumi. It trades about 0.0 of its potential returns per unit of risk. PT Bumi Resources is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 0.75 in PT Bumi Resources on September 5, 2024 and sell it today you would earn a total of 0.05 from holding PT Bumi Resources or generate 6.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
New Hope vs. PT Bumi Resources
Performance |
| Timeline |
| New HopeLimited |
| PT Bumi Resources |
New HopeLimited and PT Bumi Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with New HopeLimited and PT Bumi
The main advantage of trading using opposite New HopeLimited and PT Bumi positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if New HopeLimited 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.| New HopeLimited vs. Astral Foods Limited | New HopeLimited vs. Autohome ADR | New HopeLimited vs. CSSC Offshore Marine | New HopeLimited vs. DFS Furniture PLC |
| PT Bumi vs. IMPERIAL TOBACCO | PT Bumi vs. Perdoceo Education | PT Bumi vs. IDP EDUCATION LTD | PT Bumi vs. American Public Education |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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