Correlation Between PT Bumi and Information Services

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

Diversification Opportunities for PT Bumi and Information Services

-0.68

Correlation Coefficient

PT Bumi  Information Services

Excellent diversification

The 3 months correlation between PJM and Information is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding PT Bumi Resources and Information Services Internati in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Information Services 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 Information Services. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Information Services has no effect on the direction of PT Bumi i.e., PT Bumi and Information Services go up and down completely randomly.

Pair Corralation between PT Bumi and Information Services

Assuming the 90 days horizon PT Bumi Resources is expected to under-perform the Information Services. In addition to that, PT Bumi is 4.55 times more volatile than Information Services International Dentsu. It trades about -0.02 of its total potential returns per unit of risk. Information Services International Dentsu is currently generating about 0.09 per unit of volatility. If you would invest  3,520  in Information Services International Dentsu on December 29, 2024 and sell it today you would earn a total of  400.00  from holding Information Services International Dentsu or generate 11.36% 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.  Information Services Internati

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 latest uncertain performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Information Services

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Information Services International Dentsu are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Information Services may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with PT Bumi and Information Services

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

The idea behind PT Bumi Resources and Information Services International Dentsu 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.