Correlation Between Pratama Widya and Bumi Benowo
Can any of the company-specific risk be diversified away by investing in both Pratama Widya and Bumi Benowo 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 Pratama Widya and Bumi Benowo into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pratama Widya Tbk and Bumi Benowo Sukses, you can compare the effects of market volatilities on Pratama Widya and Bumi Benowo 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 Pratama Widya with a short position of Bumi Benowo. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pratama Widya and Bumi Benowo.
Diversification Opportunities for Pratama Widya and Bumi Benowo
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Pratama and Bumi is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Pratama Widya Tbk and Bumi Benowo Sukses in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bumi Benowo Sukses and Pratama Widya 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 Pratama Widya Tbk are associated (or correlated) with Bumi Benowo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bumi Benowo Sukses has no effect on the direction of Pratama Widya i.e., Pratama Widya and Bumi Benowo go up and down completely randomly.
Pair Corralation between Pratama Widya and Bumi Benowo
Assuming the 90 days trading horizon Pratama Widya is expected to generate 3.24 times less return on investment than Bumi Benowo. But when comparing it to its historical volatility, Pratama Widya Tbk is 4.9 times less risky than Bumi Benowo. It trades about 0.02 of its potential returns per unit of risk. Bumi Benowo Sukses is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 18,800 in Bumi Benowo Sukses on August 31, 2024 and sell it today you would lose (100.00) from holding Bumi Benowo Sukses or give up 0.53% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pratama Widya Tbk vs. Bumi Benowo Sukses
Performance |
| Timeline |
| Pratama Widya Tbk |
| Bumi Benowo Sukses |
Pratama Widya and Bumi Benowo Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pratama Widya and Bumi Benowo
The main advantage of trading using opposite Pratama Widya and Bumi Benowo positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pratama Widya position performs unexpectedly, Bumi Benowo 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 Bumi Benowo will offset losses from the drop in Bumi Benowo's long position.| Pratama Widya vs. Kencana Energi Lestari | Pratama Widya vs. Pelita Samudera Shipping | Pratama Widya vs. Paramita Bangun Sarana | Pratama Widya vs. Dana Brata Luhur |
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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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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