Correlation Between PT Bumi and Automatic Data
Can any of the company-specific risk be diversified away by investing in both PT Bumi and Automatic Data 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 Automatic Data 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 Automatic Data Processing, you can compare the effects of market volatilities on PT Bumi and Automatic Data 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 Automatic Data. Check out your portfolio center. Please also check ongoing floating volatility patterns of PT Bumi and Automatic Data.
Diversification Opportunities for PT Bumi and Automatic Data
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between PJM and Automatic is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding PT Bumi Resources and Automatic Data Processing in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Automatic Data Processing 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 Automatic Data. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Automatic Data Processing has no effect on the direction of PT Bumi i.e., PT Bumi and Automatic Data go up and down completely randomly.
Pair Corralation between PT Bumi and Automatic Data
Assuming the 90 days horizon PT Bumi Resources is expected to generate 5.12 times more return on investment than Automatic Data. However, PT Bumi is 5.12 times more volatile than Automatic Data Processing. It trades about 0.03 of its potential returns per unit of risk. Automatic Data Processing is currently generating about 0.07 per unit of risk. If you would invest 0.80 in PT Bumi Resources on September 12, 2024 and sell it today you would lose (0.05) from holding PT Bumi Resources or give up 6.25% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
PT Bumi Resources vs. Automatic Data Processing
Performance |
| Timeline |
| PT Bumi Resources |
| Automatic Data Processing |
PT Bumi and Automatic Data Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PT Bumi and Automatic Data
The main advantage of trading using opposite PT Bumi and Automatic Data positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PT Bumi position performs unexpectedly, Automatic Data 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 Automatic Data will offset losses from the drop in Automatic Data's long position.| PT Bumi vs. Automatic Data Processing | PT Bumi vs. Data3 Limited | PT Bumi vs. WisdomTree Investments | PT Bumi vs. MGIC INVESTMENT |
| Automatic Data vs. Paychex | Automatic Data vs. Superior Plus Corp | Automatic Data vs. SIVERS SEMICONDUCTORS AB | Automatic Data vs. NorAm Drilling AS |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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