Correlation Between PT Bumi and Epazz

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

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

Diversification Opportunities for PT Bumi and Epazz

-0.48

Correlation Coefficient

PT Bumi  Epazz

Very good diversification

The 3 months correlation between PBMRF and Epazz is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding PT Bumi Resources and Epazz Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Epazz Inc and PT Bumi 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 Bumi Resources are associated (or correlated) with Epazz. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Epazz Inc has no effect on the direction of PT Bumi i.e., PT Bumi and Epazz go up and down completely randomly.

Pair Corralation between PT Bumi and Epazz

Assuming the 90 days horizon PT Bumi Resources is expected to generate 2.76 times more return on investment than Epazz. However, PT Bumi is 2.76 times more volatile than Epazz Inc. It trades about 0.05 of its potential returns per unit of risk. Epazz Inc is currently generating about 0.05 per unit of risk. If you would invest  1.00  in PT Bumi Resources on September 15, 2024 and sell it today you would lose (0.40) from holding PT Bumi Resources or give up 40.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	99.8%
Values	Daily Returns

PT Bumi Resources  vs.  Epazz Inc

PT Bumi Resources

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in PT Bumi Resources are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, PT Bumi reported solid returns over the last few months and may actually be approaching a breakup point.

Epazz Inc

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Epazz Inc are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Epazz showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with PT Bumi and Epazz

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

The idea behind PT Bumi Resources and Epazz Inc 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.