Correlation Between PT Bumi and Avery Dennison
Can any of the company-specific risk be diversified away by investing in both PT Bumi and Avery Dennison 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 Avery Dennison 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 Avery Dennison Corp, you can compare the effects of market volatilities on PT Bumi and Avery Dennison 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 Avery Dennison. Check out your portfolio center. Please also check ongoing floating volatility patterns of PT Bumi and Avery Dennison.
Diversification Opportunities for PT Bumi and Avery Dennison
-0.36 | Correlation Coefficient |
Very good diversification
The 3 months correlation between PJM and Avery is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding PT Bumi Resources and Avery Dennison Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Avery Dennison Corp 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 Avery Dennison. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Avery Dennison Corp has no effect on the direction of PT Bumi i.e., PT Bumi and Avery Dennison go up and down completely randomly.
Pair Corralation between PT Bumi and Avery Dennison
Assuming the 90 days horizon PT Bumi Resources is expected to under-perform the Avery Dennison. In addition to that, PT Bumi is 3.36 times more volatile than Avery Dennison Corp. It trades about -0.18 of its total potential returns per unit of risk. Avery Dennison Corp is currently generating about -0.06 per unit of volatility. If you would invest 19,014 in Avery Dennison Corp on September 13, 2024 and sell it today you would lose (314.00) from holding Avery Dennison Corp or give up 1.65% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
PT Bumi Resources vs. Avery Dennison Corp
Performance |
| Timeline |
| PT Bumi Resources |
| Avery Dennison Corp |
PT Bumi and Avery Dennison Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PT Bumi and Avery Dennison
The main advantage of trading using opposite PT Bumi and Avery Dennison positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PT Bumi position performs unexpectedly, Avery Dennison 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 Avery Dennison will offset losses from the drop in Avery Dennison's long position.| PT Bumi vs. Pembina Pipeline Corp | PT Bumi vs. AUSTEVOLL SEAFOOD | PT Bumi vs. HF FOODS GRP | PT Bumi vs. PARKEN Sport Entertainment |
| Avery Dennison vs. FUJIFILM Holdings | Avery Dennison vs. Konica Minolta | Avery Dennison vs. KOKUYO LTD | Avery Dennison vs. Takkt AG |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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