Correlation Between Timah Persero and Bumi Resources
Can any of the company-specific risk be diversified away by investing in both Timah Persero 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 Timah Persero and Bumi Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Timah Persero Tbk and Bumi Resources Tbk, you can compare the effects of market volatilities on Timah Persero 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 Timah Persero with a short position of Bumi Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Timah Persero and Bumi Resources.
Diversification Opportunities for Timah Persero and Bumi Resources
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Timah and Bumi is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Timah Persero Tbk and Bumi Resources Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bumi Resources Tbk and Timah Persero 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 Timah Persero Tbk 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 Tbk has no effect on the direction of Timah Persero i.e., Timah Persero and Bumi Resources go up and down completely randomly.
Pair Corralation between Timah Persero and Bumi Resources
Assuming the 90 days trading horizon Timah Persero is expected to generate 1.23 times less return on investment than Bumi Resources. But when comparing it to its historical volatility, Timah Persero Tbk is 1.04 times less risky than Bumi Resources. It trades about 0.03 of its potential returns per unit of risk. Bumi Resources Tbk is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 11,400 in Bumi Resources Tbk on September 2, 2024 and sell it today you would earn a total of 3,300 from holding Bumi Resources Tbk or generate 28.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.72% |
| Values | Daily Returns |
Timah Persero Tbk vs. Bumi Resources Tbk
Performance |
| Timeline |
| Timah Persero Tbk |
| Bumi Resources Tbk |
Timah Persero and Bumi Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Timah Persero and Bumi Resources
The main advantage of trading using opposite Timah Persero and Bumi Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Timah Persero 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.| Timah Persero vs. Perusahaan Gas Negara | Timah Persero vs. Telkom Indonesia Tbk | Timah Persero vs. Mitra Pinasthika Mustika | Timah Persero vs. Jakarta Int Hotels |
| Bumi Resources vs. Aneka Tambang Persero | Bumi Resources vs. Timah Persero Tbk | Bumi Resources vs. Vale Indonesia Tbk | Bumi Resources vs. Energi Mega Persada |
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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