Correlation Between PT Bumi and ZOO Digital

Can any of the company-specific risk be diversified away by investing in both PT Bumi and ZOO Digital 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 ZOO Digital 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 ZOO Digital Group, you can compare the effects of market volatilities on PT Bumi and ZOO Digital 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 ZOO Digital. Check out your portfolio center. Please also check ongoing floating volatility patterns of PT Bumi and ZOO Digital.

Diversification Opportunities for PT Bumi and ZOO Digital

-0.67

Correlation Coefficient

PT Bumi  ZOO Digital

Excellent diversification

The 3 months correlation between PBMRF and ZOO is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding PT Bumi Resources and ZOO Digital Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ZOO Digital Group 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 ZOO Digital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ZOO Digital Group has no effect on the direction of PT Bumi i.e., PT Bumi and ZOO Digital go up and down completely randomly.

Pair Corralation between PT Bumi and ZOO Digital

Assuming the 90 days horizon PT Bumi Resources is expected to generate 2.08 times more return on investment than ZOO Digital. However, PT Bumi is 2.08 times more volatile than ZOO Digital Group. It trades about 0.16 of its potential returns per unit of risk. ZOO Digital Group is currently generating about -0.04 per unit of risk. If you would invest  0.30  in PT Bumi Resources on September 17, 2024 and sell it today you would earn a total of  0.30  from holding PT Bumi Resources or generate 100.0% return on investment over 90 days.

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

PT Bumi Resources  vs.  ZOO Digital Group

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 weak basic indicators, PT Bumi reported solid returns over the last few months and may actually be approaching a breakup point.

ZOO Digital Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ZOO Digital Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unfluctuating performance, the Stock's technical and fundamental indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with PT Bumi and ZOO Digital

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

The idea behind PT Bumi Resources and ZOO Digital Group 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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.