Correlation Between Bumi Resources and Betonjaya Manunggal

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

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

Diversification Opportunities for Bumi Resources and Betonjaya Manunggal

-0.11

Correlation Coefficient

Bumi Resources  Betonjaya Manunggal

Good diversification

The 3 months correlation between Bumi and Betonjaya is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Bumi Resources Minerals and Betonjaya Manunggal Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Betonjaya Manunggal Tbk and Bumi Resources 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 Resources Minerals are associated (or correlated) with Betonjaya Manunggal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Betonjaya Manunggal Tbk has no effect on the direction of Bumi Resources i.e., Bumi Resources and Betonjaya Manunggal go up and down completely randomly.

Pair Corralation between Bumi Resources and Betonjaya Manunggal

Assuming the 90 days trading horizon Bumi Resources Minerals is expected to under-perform the Betonjaya Manunggal. In addition to that, Bumi Resources is 1.82 times more volatile than Betonjaya Manunggal Tbk. It trades about -0.02 of its total potential returns per unit of risk. Betonjaya Manunggal Tbk is currently generating about 0.02 per unit of volatility. If you would invest  41,400  in Betonjaya Manunggal Tbk on December 2, 2024 and sell it today you would earn a total of  200.00  from holding Betonjaya Manunggal Tbk or generate 0.48% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.31%
Values	Daily Returns

Bumi Resources Minerals  vs.  Betonjaya Manunggal Tbk

Bumi Resources Minerals

Risk-Adjusted Performance

Very Weak

Over the last 90 days Bumi Resources Minerals has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent forward-looking signals, Bumi Resources is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Betonjaya Manunggal Tbk

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Betonjaya Manunggal Tbk are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent forward-looking signals, Betonjaya Manunggal is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Bumi Resources and Betonjaya Manunggal

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

The idea behind Bumi Resources Minerals and Betonjaya Manunggal Tbk 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.