Correlation Between Bumi Benowo and Makmur Berkah

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

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

Diversification Opportunities for Bumi Benowo and Makmur Berkah

0.5

Correlation Coefficient

Bumi Benowo  Makmur Berkah

Very weak diversification

The 3 months correlation between Bumi and Makmur is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Bumi Benowo Sukses and Makmur Berkah Amanda in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Makmur Berkah Amanda and Bumi Benowo 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 Bumi Benowo Sukses are associated (or correlated) with Makmur Berkah. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Makmur Berkah Amanda has no effect on the direction of Bumi Benowo i.e., Bumi Benowo and Makmur Berkah go up and down completely randomly.

Pair Corralation between Bumi Benowo and Makmur Berkah

Assuming the 90 days trading horizon Bumi Benowo Sukses is expected to generate 0.96 times more return on investment than Makmur Berkah. However, Bumi Benowo Sukses is 1.04 times less risky than Makmur Berkah. It trades about 0.06 of its potential returns per unit of risk. Makmur Berkah Amanda is currently generating about -0.06 per unit of risk. If you would invest  6,600  in Bumi Benowo Sukses on October 26, 2024 and sell it today you would earn a total of  10,400  from holding Bumi Benowo Sukses or generate 157.58% return on investment over 90 days.

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

Bumi Benowo Sukses  vs.  Makmur Berkah Amanda

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.

Makmur Berkah Amanda

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Makmur Berkah Amanda 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.

Pair Trading with Bumi Benowo and Makmur Berkah

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

The idea behind Bumi Benowo Sukses and Makmur Berkah Amanda 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.