Correlation Between PT Bukalapak and Bumi Resources

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

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

Diversification Opportunities for PT Bukalapak and Bumi Resources

-0.22

Correlation Coefficient

PT Bukalapak  Bumi Resources

Very good diversification

The 3 months correlation between BUKA and Bumi is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding PT Bukalapak and Bumi Resources Minerals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bumi Resources Minerals and PT Bukalapak 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 PT Bukalapak are associated (or correlated) with Bumi Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bumi Resources Minerals has no effect on the direction of PT Bukalapak i.e., PT Bukalapak and Bumi Resources go up and down completely randomly.

Pair Corralation between PT Bukalapak and Bumi Resources

Assuming the 90 days trading horizon PT Bukalapak is expected to generate 0.64 times more return on investment than Bumi Resources. However, PT Bukalapak is 1.56 times less risky than Bumi Resources. It trades about 0.07 of its potential returns per unit of risk. Bumi Resources Minerals is currently generating about 0.02 per unit of risk. If you would invest  12,300  in PT Bukalapak on December 26, 2024 and sell it today you would earn a total of  1,400  from holding PT Bukalapak or generate 11.38% return on investment over 90 days.

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

PT Bukalapak  vs.  Bumi Resources Minerals

PT Bukalapak

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in PT Bukalapak are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, PT Bukalapak disclosed solid returns over the last few months and may actually be approaching a breakup point.

Bumi Resources Minerals

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Bumi Resources Minerals are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. 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.

Pair Trading with PT Bukalapak and Bumi Resources

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

The idea behind PT Bukalapak and Bumi Resources Minerals 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.