Correlation Between PT Bumi and PT Adaro
Can any of the company-specific risk be diversified away by investing in both PT Bumi and PT Adaro 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 PT Adaro 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 PT Adaro Energy, you can compare the effects of market volatilities on PT Bumi and PT Adaro 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 PT Adaro. Check out your portfolio center. Please also check ongoing floating volatility patterns of PT Bumi and PT Adaro.
Diversification Opportunities for PT Bumi and PT Adaro
Good diversification
The 3 months correlation between PJM and A64 is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding PT Bumi Resources and PT Adaro Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PT Adaro Energy 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 PT Adaro. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PT Adaro Energy has no effect on the direction of PT Bumi i.e., PT Bumi and PT Adaro go up and down completely randomly.
Pair Corralation between PT Bumi and PT Adaro
Assuming the 90 days horizon PT Bumi Resources is expected to generate 0.89 times more return on investment than PT Adaro. However, PT Bumi Resources is 1.12 times less risky than PT Adaro. It trades about 0.07 of its potential returns per unit of risk. PT Adaro Energy is currently generating about -0.22 per unit of risk. 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 Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
PT Bumi Resources vs. PT Adaro Energy
Performance |
| Timeline |
| PT Bumi Resources |
| PT Adaro Energy |
PT Bumi and PT Adaro Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PT Bumi and PT Adaro
The main advantage of trading using opposite PT Bumi and PT Adaro positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PT Bumi position performs unexpectedly, PT Adaro 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 Adaro will offset losses from the drop in PT Adaro's long position.| PT Bumi vs. IMPERIAL TOBACCO | PT Bumi vs. Perdoceo Education | PT Bumi vs. IDP EDUCATION LTD | PT Bumi vs. American Public Education |
| PT Adaro vs. PT Bayan Resources | PT Adaro vs. Yanzhou Coal Mining | PT Adaro vs. Yanzhou Coal Mining | PT Adaro vs. PT Bumi Resources |
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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
Other Complementary Tools
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated | |
| Analyst Advice Analyst recommendations and target price estimates broken down by several categories | |
| Global Correlations Find global opportunities by holding instruments from different markets | |
| Equity Analysis Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities | |
| Investing Opportunities Build portfolios using our predefined set of ideas and optimize them against your investing preferences |