Correlation Between Tesla and PT Bumi
Can any of the company-specific risk be diversified away by investing in both Tesla and PT Bumi 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 Tesla and PT Bumi into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tesla Inc and PT Bumi Resources, you can compare the effects of market volatilities on Tesla and PT Bumi 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 Tesla with a short position of PT Bumi. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tesla and PT Bumi.
Diversification Opportunities for Tesla and PT Bumi
Pay attention - limited upside
The 3 months correlation between Tesla and PBMRF is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding Tesla Inc and PT Bumi Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PT Bumi Resources and Tesla 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 Tesla Inc are associated (or correlated) with PT Bumi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PT Bumi Resources has no effect on the direction of Tesla i.e., Tesla and PT Bumi go up and down completely randomly.
Pair Corralation between Tesla and PT Bumi
Given the investment horizon of 90 days Tesla Inc is expected to under-perform the PT Bumi. But the stock apears to be less risky and, when comparing its historical volatility, Tesla Inc is 7.07 times less risky than PT Bumi. The stock trades about -0.01 of its potential returns per unit of risk. The PT Bumi Resources is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest 0.21 in PT Bumi Resources on October 20, 2024 and sell it today you would earn a total of 0.30 from holding PT Bumi Resources or generate 142.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 86.36% |
| Values | Daily Returns |
Tesla Inc vs. PT Bumi Resources
Performance |
| Timeline |
| Tesla Inc |
| PT Bumi Resources |
Tesla and PT Bumi Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tesla and PT Bumi
The main advantage of trading using opposite Tesla and PT Bumi positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tesla position performs unexpectedly, PT Bumi 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 PT Bumi will offset losses from the drop in PT Bumi's long position.| Tesla vs. Canoo Inc | Tesla vs. Aquagold International | Tesla vs. Morningstar Unconstrained Allocation | Tesla vs. Via Renewables |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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