Correlation Between PT Bumi and ENGIE ADR/1
Can any of the company-specific risk be diversified away by investing in both PT Bumi and ENGIE ADR/1 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 ENGIE ADR/1 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 ENGIE ADR1 EO, you can compare the effects of market volatilities on PT Bumi and ENGIE ADR/1 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 ENGIE ADR/1. Check out your portfolio center. Please also check ongoing floating volatility patterns of PT Bumi and ENGIE ADR/1.
Diversification Opportunities for PT Bumi and ENGIE ADR/1
-0.5 | Correlation Coefficient |
Very good diversification
The 3 months correlation between PJM and ENGIE is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding PT Bumi Resources and ENGIE ADR1 EO in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ENGIE ADR1 EO 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 ENGIE ADR/1. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ENGIE ADR1 EO has no effect on the direction of PT Bumi i.e., PT Bumi and ENGIE ADR/1 go up and down completely randomly.
Pair Corralation between PT Bumi and ENGIE ADR/1
Assuming the 90 days horizon PT Bumi Resources is expected to generate 4.39 times more return on investment than ENGIE ADR/1. However, PT Bumi is 4.39 times more volatile than ENGIE ADR1 EO. It trades about 0.04 of its potential returns per unit of risk. ENGIE ADR1 EO is currently generating about 0.05 per unit of risk. If you would invest 0.75 in PT Bumi Resources on August 28, 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 | Very Weak |
| Accuracy | 99.79% |
| Values | Daily Returns |
PT Bumi Resources vs. ENGIE ADR1 EO
Performance |
| Timeline |
| PT Bumi Resources |
| ENGIE ADR1 EO |
PT Bumi and ENGIE ADR/1 Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PT Bumi and ENGIE ADR/1
The main advantage of trading using opposite PT Bumi and ENGIE ADR/1 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PT Bumi position performs unexpectedly, ENGIE ADR/1 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 ENGIE ADR/1 will offset losses from the drop in ENGIE ADR/1's long position.| PT Bumi vs. RYU Apparel | PT Bumi vs. Constellation Software | PT Bumi vs. Unity Software | PT Bumi vs. CARSALESCOM |
| ENGIE ADR/1 vs. Sempra | ENGIE ADR/1 vs. Superior Plus Corp | ENGIE ADR/1 vs. NMI Holdings | ENGIE ADR/1 vs. Origin Agritech |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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