Correlation Between Siamgas and Bumitama Agri

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

By analyzing existing cross correlation between Siamgas And Petrochemicals and Bumitama Agri, you can compare the effects of market volatilities on Siamgas and Bumitama Agri 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 Siamgas with a short position of Bumitama Agri. Check out your portfolio center. Please also check ongoing floating volatility patterns of Siamgas and Bumitama Agri.

Diversification Opportunities for Siamgas and Bumitama Agri

-0.21

Correlation Coefficient

Siamgas  Bumitama Agri

Very good diversification

The 3 months correlation between Siamgas and Bumitama is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Siamgas And Petrochemicals and Bumitama Agri in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bumitama Agri and Siamgas 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 Siamgas And Petrochemicals are associated (or correlated) with Bumitama Agri. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bumitama Agri has no effect on the direction of Siamgas i.e., Siamgas and Bumitama Agri go up and down completely randomly.

Pair Corralation between Siamgas and Bumitama Agri

Assuming the 90 days trading horizon Siamgas And Petrochemicals is expected to generate 2.51 times more return on investment than Bumitama Agri. However, Siamgas is 2.51 times more volatile than Bumitama Agri. It trades about 0.04 of its potential returns per unit of risk. Bumitama Agri is currently generating about 0.06 per unit of risk. If you would invest  11.00  in Siamgas And Petrochemicals on October 10, 2024 and sell it today you would earn a total of  7.00  from holding Siamgas And Petrochemicals or generate 63.64% return on investment over 90 days.

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

Siamgas And Petrochemicals  vs.  Bumitama Agri

Siamgas And Petroche

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Siamgas And Petrochemicals are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Siamgas is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Bumitama Agri

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Bumitama Agri are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Bumitama Agri reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Siamgas and Bumitama Agri

The main advantage of trading using opposite Siamgas and Bumitama Agri positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Siamgas position performs unexpectedly, Bumitama Agri 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 Bumitama Agri will offset losses from the drop in Bumitama Agri's long position.

The idea behind Siamgas And Petrochemicals and Bumitama Agri 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.

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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.