Correlation Between Geo Energy and Bukit Asam

Can any of the company-specific risk be diversified away by investing in both Geo Energy and Bukit Asam 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 Geo Energy and Bukit Asam into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for Geo Energy and Bukit Asam

-0.37

Correlation Coefficient

Geo Energy  Bukit Asam

Very good diversification

The 3 months correlation between Geo and Bukit is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Geo Energy Resources and Bukit Asam Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bukit Asam Tbk and Geo Energy 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 Geo Energy Resources are associated (or correlated) with Bukit Asam. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bukit Asam Tbk has no effect on the direction of Geo Energy i.e., Geo Energy and Bukit Asam go up and down completely randomly.

Pair Corralation between Geo Energy and Bukit Asam

Assuming the 90 days horizon Geo Energy is expected to generate 1.76 times less return on investment than Bukit Asam. But when comparing it to its historical volatility, Geo Energy Resources is 1.51 times less risky than Bukit Asam. It trades about 0.03 of its potential returns per unit of risk. Bukit Asam Tbk is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  333.00  in Bukit Asam Tbk on December 28, 2024 and sell it today you would earn a total of  67.00  from holding Bukit Asam Tbk or generate 20.12% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	65.53%
Values	Daily Returns

Geo Energy Resources  vs.  Bukit Asam Tbk

Geo Energy Resources

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Geo Energy Resources are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Geo Energy reported solid returns over the last few months and may actually be approaching a breakup point.

Bukit Asam Tbk

Risk-Adjusted Performance

Very Weak

Over the last 90 days Bukit Asam Tbk has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong technical and fundamental indicators, Bukit Asam is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Geo Energy and Bukit Asam

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

The idea behind Geo Energy Resources and Bukit Asam 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.

Check out your portfolio center.

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 .