Correlation Between PT Bumi and Postal Savings

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

Diversification Opportunities for PT Bumi and Postal Savings

0.24

Correlation Coefficient

PT Bumi  Postal Savings

Modest diversification

The 3 months correlation between PJM and Postal is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding PT Bumi Resources and Postal Savings Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Postal Savings Bank 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 Postal Savings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Postal Savings Bank has no effect on the direction of PT Bumi i.e., PT Bumi and Postal Savings go up and down completely randomly.

Pair Corralation between PT Bumi and Postal Savings

Assuming the 90 days horizon PT Bumi Resources is expected to under-perform the Postal Savings. In addition to that, PT Bumi is 1.82 times more volatile than Postal Savings Bank. It trades about -0.05 of its total potential returns per unit of risk. Postal Savings Bank is currently generating about 0.16 per unit of volatility. If you would invest  40.00  in Postal Savings Bank on December 21, 2024 and sell it today you would earn a total of  21.00  from holding Postal Savings Bank or generate 52.5% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.33%
Values	Daily Returns

PT Bumi Resources  vs.  Postal Savings Bank

PT Bumi Resources

Risk-Adjusted Performance

Very Weak

Over the last 90 days PT Bumi Resources has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Postal Savings Bank

Risk-Adjusted Performance

Good

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

Pair Trading with PT Bumi and Postal Savings

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

The idea behind PT Bumi Resources and Postal Savings Bank 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.