Correlation Between PT Bumi and Kainos Group
Can any of the company-specific risk be diversified away by investing in both PT Bumi and Kainos Group 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 Kainos Group 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 Kainos Group plc, you can compare the effects of market volatilities on PT Bumi and Kainos Group 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 Kainos Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of PT Bumi and Kainos Group.
Diversification Opportunities for PT Bumi and Kainos Group
-0.16 | Correlation Coefficient |
Good diversification
The 3 months correlation between PBMRF and Kainos is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding PT Bumi Resources and Kainos Group plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kainos Group plc 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 Kainos Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kainos Group plc has no effect on the direction of PT Bumi i.e., PT Bumi and Kainos Group go up and down completely randomly.
Pair Corralation between PT Bumi and Kainos Group
Assuming the 90 days horizon PT Bumi Resources is expected to generate 85.76 times more return on investment than Kainos Group. However, PT Bumi is 85.76 times more volatile than Kainos Group plc. It trades about 0.18 of its potential returns per unit of risk. Kainos Group plc is currently generating about -0.31 per unit of risk. If you would invest 1.00 in PT Bumi Resources on December 6, 2024 and sell it today you would lose (0.52) from holding PT Bumi Resources or give up 52.0% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
PT Bumi Resources vs. Kainos Group plc
Performance |
Timeline |
PT Bumi Resources |
Kainos Group plc |
PT Bumi and Kainos Group Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with PT Bumi and Kainos Group
The main advantage of trading using opposite PT Bumi and Kainos Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PT Bumi position performs unexpectedly, Kainos Group 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 Kainos Group will offset losses from the drop in Kainos Group's long position.The idea behind PT Bumi Resources and Kainos Group plc 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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