Correlation Between Bumi Teknokultura and Anabatic Technologies

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

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

Diversification Opportunities for Bumi Teknokultura and Anabatic Technologies

0.28

Correlation Coefficient

Bumi Teknokultura  Anabatic Technologies

Modest diversification

The 3 months correlation between Bumi and Anabatic is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Bumi Teknokultura Unggul and Anabatic Technologies Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Anabatic Technologies Tbk and Bumi Teknokultura 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 Teknokultura Unggul are associated (or correlated) with Anabatic Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Anabatic Technologies Tbk has no effect on the direction of Bumi Teknokultura i.e., Bumi Teknokultura and Anabatic Technologies go up and down completely randomly.

Pair Corralation between Bumi Teknokultura and Anabatic Technologies

Assuming the 90 days trading horizon Bumi Teknokultura Unggul is expected to generate 6.92 times more return on investment than Anabatic Technologies. However, Bumi Teknokultura is 6.92 times more volatile than Anabatic Technologies Tbk. It trades about 0.02 of its potential returns per unit of risk. Anabatic Technologies Tbk is currently generating about 0.01 per unit of risk. If you would invest  5,000  in Bumi Teknokultura Unggul on October 9, 2024 and sell it today you would lose (4,700) from holding Bumi Teknokultura Unggul or give up 94.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	99.79%
Values	Daily Returns

Bumi Teknokultura Unggul  vs.  Anabatic Technologies Tbk

Bumi Teknokultura Unggul

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Bumi Teknokultura Unggul are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Bumi Teknokultura disclosed solid returns over the last few months and may actually be approaching a breakup point.

Anabatic Technologies Tbk

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Anabatic Technologies Tbk has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent forward-looking signals, Anabatic Technologies 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 Teknokultura and Anabatic Technologies

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

The idea behind Bumi Teknokultura Unggul and Anabatic Technologies 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .