Correlation Between Bumi Resources and Intraco Penta

Can any of the company-specific risk be diversified away by investing in both Bumi Resources and Intraco Penta 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 Intraco Penta 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 Intraco Penta Tbk, you can compare the effects of market volatilities on Bumi Resources and Intraco Penta 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 Intraco Penta. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bumi Resources and Intraco Penta.

Diversification Opportunities for Bumi Resources and Intraco Penta

0.4

Correlation Coefficient

Bumi Resources  Intraco Penta

Very weak diversification

The 3 months correlation between Bumi and Intraco is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Bumi Resources Minerals and Intraco Penta Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Intraco Penta 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 Intraco Penta. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Intraco Penta Tbk has no effect on the direction of Bumi Resources i.e., Bumi Resources and Intraco Penta go up and down completely randomly.

Pair Corralation between Bumi Resources and Intraco Penta

Assuming the 90 days trading horizon Bumi Resources is expected to generate 2.74 times less return on investment than Intraco Penta. In addition to that, Bumi Resources is 1.02 times more volatile than Intraco Penta Tbk. It trades about 0.01 of its total potential returns per unit of risk. Intraco Penta Tbk is currently generating about 0.02 per unit of volatility. If you would invest  1,200  in Intraco Penta Tbk on December 29, 2024 and sell it today you would earn a total of  0.00  from holding Intraco Penta Tbk or generate 0.0% return on investment over 90 days.

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

Bumi Resources Minerals  vs.  Intraco Penta 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.

Intraco Penta Tbk

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Intraco Penta Tbk are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Intraco Penta may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Bumi Resources and Intraco Penta

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

The idea behind Bumi Resources Minerals and Intraco Penta 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.