Correlation Between Bekasi Asri and Bumi Benowo

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

By analyzing existing cross correlation between Bekasi Asri Pemula and Bumi Benowo Sukses, you can compare the effects of market volatilities on Bekasi Asri and Bumi Benowo 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 Bekasi Asri with a short position of Bumi Benowo. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bekasi Asri and Bumi Benowo.

Diversification Opportunities for Bekasi Asri and Bumi Benowo

0.34

Correlation Coefficient

Bekasi Asri  Bumi Benowo

Weak diversification

The 3 months correlation between Bekasi and Bumi is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Bekasi Asri Pemula and Bumi Benowo Sukses in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bumi Benowo Sukses and Bekasi Asri 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 Bekasi Asri Pemula are associated (or correlated) with Bumi Benowo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bumi Benowo Sukses has no effect on the direction of Bekasi Asri i.e., Bekasi Asri and Bumi Benowo go up and down completely randomly.

Pair Corralation between Bekasi Asri and Bumi Benowo

Assuming the 90 days trading horizon Bekasi Asri is expected to generate 1.66 times less return on investment than Bumi Benowo. But when comparing it to its historical volatility, Bekasi Asri Pemula is 1.36 times less risky than Bumi Benowo. It trades about 0.04 of its potential returns per unit of risk. Bumi Benowo Sukses is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  13,500  in Bumi Benowo Sukses on October 12, 2024 and sell it today you would earn a total of  2,500  from holding Bumi Benowo Sukses or generate 18.52% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Bekasi Asri Pemula  vs.  Bumi Benowo Sukses

Bekasi Asri Pemula

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bekasi Asri Pemula has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's forward-looking signals remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Bumi Benowo Sukses

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bumi Benowo Sukses has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's forward-looking signals remain quite persistent which may send shares a bit higher in February 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Bekasi Asri and Bumi Benowo

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

The idea behind Bekasi Asri Pemula and Bumi Benowo Sukses 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.