Correlation Between PT Bumi and Aterian
Can any of the company-specific risk be diversified away by investing in both PT Bumi and Aterian 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 Aterian 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 Aterian, you can compare the effects of market volatilities on PT Bumi and Aterian 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 Aterian. Check out your portfolio center. Please also check ongoing floating volatility patterns of PT Bumi and Aterian.
Diversification Opportunities for PT Bumi and Aterian
Excellent diversification
The 3 months correlation between PBMRF and Aterian is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding PT Bumi Resources and Aterian in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aterian 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 Aterian. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aterian has no effect on the direction of PT Bumi i.e., PT Bumi and Aterian go up and down completely randomly.
Pair Corralation between PT Bumi and Aterian
Assuming the 90 days horizon PT Bumi Resources is expected to generate 3.11 times more return on investment than Aterian. However, PT Bumi is 3.11 times more volatile than Aterian. It trades about 0.07 of its potential returns per unit of risk. Aterian is currently generating about -0.03 per unit of risk. If you would invest 0.50 in PT Bumi Resources on August 28, 2024 and sell it today you would earn a total of 0.10 from holding PT Bumi Resources or generate 20.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
PT Bumi Resources vs. Aterian
Performance |
| Timeline |
| PT Bumi Resources |
| Aterian |
PT Bumi and Aterian Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PT Bumi and Aterian
The main advantage of trading using opposite PT Bumi and Aterian positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PT Bumi position performs unexpectedly, Aterian 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 Aterian will offset losses from the drop in Aterian's long position.The idea behind PT Bumi Resources and Aterian 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.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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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