Correlation Between PT Bumi and EON SE
Can any of the company-specific risk be diversified away by investing in both PT Bumi and EON SE 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 EON SE 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 EON SE, you can compare the effects of market volatilities on PT Bumi and EON SE 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 EON SE. Check out your portfolio center. Please also check ongoing floating volatility patterns of PT Bumi and EON SE.
Diversification Opportunities for PT Bumi and EON SE
Excellent diversification
The 3 months correlation between PJM and EON is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding PT Bumi Resources and EON SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EON SE 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 EON SE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EON SE has no effect on the direction of PT Bumi i.e., PT Bumi and EON SE go up and down completely randomly.
Pair Corralation between PT Bumi and EON SE
Assuming the 90 days horizon PT Bumi Resources is expected to generate 6.37 times more return on investment than EON SE. However, PT Bumi is 6.37 times more volatile than EON SE. It trades about 0.06 of its potential returns per unit of risk. EON SE is currently generating about 0.02 per unit of risk. If you would invest 0.55 in PT Bumi Resources on August 29, 2024 and sell it today you would earn a total of 0.25 from holding PT Bumi Resources or generate 45.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
PT Bumi Resources vs. EON SE
Performance |
| Timeline |
| PT Bumi Resources |
| EON SE |
PT Bumi and EON SE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PT Bumi and EON SE
The main advantage of trading using opposite PT Bumi and EON SE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PT Bumi position performs unexpectedly, EON SE 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 EON SE will offset losses from the drop in EON SE's long position.| PT Bumi vs. RYU Apparel | PT Bumi vs. Constellation Software | PT Bumi vs. Unity Software | PT Bumi vs. CARSALESCOM |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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