Correlation Between Singaraja Putra and Bumi Resources

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Can any of the company-specific risk be diversified away by investing in both Singaraja Putra and Bumi Resources 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 Singaraja Putra and Bumi Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Singaraja Putra and Bumi Resources Minerals, you can compare the effects of market volatilities on Singaraja Putra and Bumi Resources 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 Singaraja Putra with a short position of Bumi Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Singaraja Putra and Bumi Resources.

Diversification Opportunities for Singaraja Putra and Bumi Resources

0.88
  Correlation Coefficient

Very poor diversification

The 3 months correlation between Singaraja and Bumi is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Singaraja Putra and Bumi Resources Minerals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bumi Resources Minerals and Singaraja Putra 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 Singaraja Putra are associated (or correlated) with Bumi Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bumi Resources Minerals has no effect on the direction of Singaraja Putra i.e., Singaraja Putra and Bumi Resources go up and down completely randomly.

Pair Corralation between Singaraja Putra and Bumi Resources

Assuming the 90 days trading horizon Singaraja Putra is expected to generate 1.72 times more return on investment than Bumi Resources. However, Singaraja Putra is 1.72 times more volatile than Bumi Resources Minerals. It trades about 0.08 of its potential returns per unit of risk. Bumi Resources Minerals is currently generating about 0.07 per unit of risk. If you would invest  111,000  in Singaraja Putra on August 27, 2024 and sell it today you would earn a total of  307,000  from holding Singaraja Putra or generate 276.58% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthStrong
Accuracy100.0%
ValuesDaily Returns

Singaraja Putra  vs.  Bumi Resources Minerals

 Performance 
       Timeline  
Singaraja Putra 

Risk-Adjusted Performance

14 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Singaraja Putra are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Singaraja Putra disclosed solid returns over the last few months and may actually be approaching a breakup point.
Bumi Resources Minerals 

Risk-Adjusted Performance

24 of 100

 
Weak
 
Strong
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in Bumi Resources Minerals are ranked lower than 24 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Bumi Resources disclosed solid returns over the last few months and may actually be approaching a breakup point.

Singaraja Putra and Bumi Resources Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Singaraja Putra and Bumi Resources

The main advantage of trading using opposite Singaraja Putra and Bumi Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Singaraja Putra position performs unexpectedly, Bumi Resources 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 Resources will offset losses from the drop in Bumi Resources' long position.
The idea behind Singaraja Putra and Bumi Resources Minerals pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.

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