Correlation Between PT Bumi and Acciona SA
Can any of the company-specific risk be diversified away by investing in both PT Bumi and Acciona SA 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 PT Bumi and Acciona SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PT Bumi Resources and Acciona SA, you can compare the effects of market volatilities on PT Bumi and Acciona SA 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 PT Bumi with a short position of Acciona SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of PT Bumi and Acciona SA.
Diversification Opportunities for PT Bumi and Acciona SA
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between PBMRF and Acciona is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding PT Bumi Resources and Acciona SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Acciona SA and PT Bumi 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 PT Bumi Resources are associated (or correlated) with Acciona SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Acciona SA has no effect on the direction of PT Bumi i.e., PT Bumi and Acciona SA go up and down completely randomly.
Pair Corralation between PT Bumi and Acciona SA
Assuming the 90 days horizon PT Bumi Resources is expected to generate 18.68 times more return on investment than Acciona SA. However, PT Bumi is 18.68 times more volatile than Acciona SA. It trades about 0.22 of its potential returns per unit of risk. Acciona SA is currently generating about -0.08 per unit of risk. If you would invest 0.21 in PT Bumi Resources on October 26, 2024 and sell it today you would earn a total of 0.30 from holding PT Bumi Resources or generate 142.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 90.0% |
| Values | Daily Returns |
PT Bumi Resources vs. Acciona SA
Performance |
| Timeline |
| PT Bumi Resources |
| Acciona SA |
PT Bumi and Acciona SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PT Bumi and Acciona SA
The main advantage of trading using opposite PT Bumi and Acciona SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PT Bumi position performs unexpectedly, Acciona SA 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 Acciona SA will offset losses from the drop in Acciona SA's long position.The idea behind PT Bumi Resources and Acciona SA 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.| Acciona SA vs. JGC Corp | Acciona SA vs. ACS Actividades de | Acciona SA vs. Kajima Corp ADR | Acciona SA vs. ACS Actividades De |
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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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