Correlation Between PT Bumi and Immofinanz

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

Diversification Opportunities for PT Bumi and Immofinanz

-0.91

Correlation Coefficient

PT Bumi  Immofinanz

Pay attention - limited upside

The 3 months correlation between PJM and Immofinanz is -0.91. Overlapping area represents the amount of risk that can be diversified away by holding PT Bumi Resources and Immofinanz AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Immofinanz AG 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 Immofinanz. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Immofinanz AG has no effect on the direction of PT Bumi i.e., PT Bumi and Immofinanz go up and down completely randomly.

Pair Corralation between PT Bumi and Immofinanz

Assuming the 90 days horizon PT Bumi Resources is expected to generate 1.68 times more return on investment than Immofinanz. However, PT Bumi is 1.68 times more volatile than Immofinanz AG. It trades about 0.15 of its potential returns per unit of risk. Immofinanz AG is currently generating about -0.21 per unit of risk. If you would invest  0.50  in PT Bumi Resources on September 4, 2024 and sell it today you would earn a total of  0.30  from holding PT Bumi Resources or generate 60.0% return on investment over 90 days.

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

PT Bumi Resources  vs.  Immofinanz AG

PT Bumi Resources

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in PT Bumi Resources are ranked lower than 11 (%) 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.

Immofinanz AG

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with PT Bumi and Immofinanz

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

The idea behind PT Bumi Resources and Immofinanz AG 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 Global Correlations module to find global opportunities by holding instruments from different markets.