Correlation Between PT Bumi and Hamilton Beach
Can any of the company-specific risk be diversified away by investing in both PT Bumi and Hamilton Beach 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 Hamilton Beach 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 Hamilton Beach Brands, you can compare the effects of market volatilities on PT Bumi and Hamilton Beach 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 Hamilton Beach. Check out your portfolio center. Please also check ongoing floating volatility patterns of PT Bumi and Hamilton Beach.
Diversification Opportunities for PT Bumi and Hamilton Beach
-0.54 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between PBMRF and Hamilton is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding PT Bumi Resources and Hamilton Beach Brands in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hamilton Beach Brands 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 Hamilton Beach. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hamilton Beach Brands has no effect on the direction of PT Bumi i.e., PT Bumi and Hamilton Beach go up and down completely randomly.
Pair Corralation between PT Bumi and Hamilton Beach
Assuming the 90 days horizon PT Bumi Resources is expected to generate 13.84 times more return on investment than Hamilton Beach. However, PT Bumi is 13.84 times more volatile than Hamilton Beach Brands. It trades about 0.06 of its potential returns per unit of risk. Hamilton Beach Brands is currently generating about 0.04 per unit of risk. If you would invest 1.00 in PT Bumi Resources on August 28, 2024 and sell it today you would lose (0.40) from holding PT Bumi Resources or give up 40.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
PT Bumi Resources vs. Hamilton Beach Brands
Performance |
| Timeline |
| PT Bumi Resources |
| Hamilton Beach Brands |
PT Bumi and Hamilton Beach Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PT Bumi and Hamilton Beach
The main advantage of trading using opposite PT Bumi and Hamilton Beach positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PT Bumi position performs unexpectedly, Hamilton Beach 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 Hamilton Beach will offset losses from the drop in Hamilton Beach's long position.The idea behind PT Bumi Resources and Hamilton Beach Brands 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.| Hamilton Beach vs. Bassett Furniture Industries | Hamilton Beach vs. Flexsteel Industries | Hamilton Beach vs. Natuzzi SpA | Hamilton Beach vs. La Z Boy Incorporated |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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