Correlation Between PT Bumi and Britvic PLC
Can any of the company-specific risk be diversified away by investing in both PT Bumi and Britvic PLC 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 Britvic PLC 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 Britvic PLC ADR, you can compare the effects of market volatilities on PT Bumi and Britvic PLC 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 Britvic PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of PT Bumi and Britvic PLC.
Diversification Opportunities for PT Bumi and Britvic PLC
-0.36 | Correlation Coefficient |
Very good diversification
The 3 months correlation between PBMRF and Britvic is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding PT Bumi Resources and Britvic PLC ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Britvic PLC ADR 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 Britvic PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Britvic PLC ADR has no effect on the direction of PT Bumi i.e., PT Bumi and Britvic PLC go up and down completely randomly.
Pair Corralation between PT Bumi and Britvic PLC
Assuming the 90 days horizon PT Bumi Resources is expected to under-perform the Britvic PLC. In addition to that, PT Bumi is 7.86 times more volatile than Britvic PLC ADR. It trades about -0.05 of its total potential returns per unit of risk. Britvic PLC ADR is currently generating about -0.15 per unit of volatility. If you would invest 3,150 in Britvic PLC ADR on December 1, 2024 and sell it today you would lose (199.00) from holding Britvic PLC ADR or give up 6.32% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 45.45% |
| Values | Daily Returns |
PT Bumi Resources vs. Britvic PLC ADR
Performance |
| Timeline |
| PT Bumi Resources |
| Britvic PLC ADR |
Risk-Adjusted Performance
Very Weak
Weak | Strong |
PT Bumi and Britvic PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PT Bumi and Britvic PLC
The main advantage of trading using opposite PT Bumi and Britvic PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PT Bumi position performs unexpectedly, Britvic PLC 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 Britvic PLC will offset losses from the drop in Britvic PLC's long position.The idea behind PT Bumi Resources and Britvic PLC ADR 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.| Britvic PLC vs. Flow Beverage Corp | Britvic PLC vs. Barfresh Food Group | Britvic PLC vs. Fbec Worldwide | Britvic PLC vs. Greene Concepts |
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 CEOs Directory module to screen CEOs from public companies around the world.
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