Correlation Between AWILCO DRILLING and PT Bumi

Can any of the company-specific risk be diversified away by investing in both AWILCO DRILLING 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 AWILCO DRILLING and PT Bumi into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between AWILCO DRILLING PLC and PT Bumi Resources, you can compare the effects of market volatilities on AWILCO DRILLING 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 AWILCO DRILLING with a short position of PT Bumi. Check out your portfolio center. Please also check ongoing floating volatility patterns of AWILCO DRILLING and PT Bumi.

Diversification Opportunities for AWILCO DRILLING and PT Bumi

-0.15

Correlation Coefficient

AWILCO DRILLING  PT Bumi

Good diversification

The 3 months correlation between AWILCO and PJM is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding AWILCO DRILLING PLC 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 AWILCO DRILLING 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 AWILCO DRILLING PLC 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 AWILCO DRILLING i.e., AWILCO DRILLING and PT Bumi go up and down completely randomly.

Pair Corralation between AWILCO DRILLING and PT Bumi

Assuming the 90 days trading horizon AWILCO DRILLING PLC is expected to generate 2.15 times more return on investment than PT Bumi. However, AWILCO DRILLING is 2.15 times more volatile than PT Bumi Resources. It trades about 0.04 of its potential returns per unit of risk. PT Bumi Resources is currently generating about 0.03 per unit of risk. If you would invest  251.00  in AWILCO DRILLING PLC on October 25, 2024 and sell it today you would lose (45.00) from holding AWILCO DRILLING PLC or give up 17.93% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

AWILCO DRILLING PLC  vs.  PT Bumi Resources

AWILCO DRILLING PLC

Risk-Adjusted Performance

5 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in AWILCO DRILLING PLC are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain forward indicators, AWILCO DRILLING reported solid returns over the last few months and may actually be approaching a breakup point.

PT Bumi Resources

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PT Bumi Resources has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with AWILCO DRILLING and PT Bumi

The main advantage of trading using opposite AWILCO DRILLING and PT Bumi positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AWILCO DRILLING 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.

The idea behind AWILCO DRILLING PLC and PT Bumi Resources 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.