Correlation Between Bumi Teknokultura and Budi Starch

Can any of the company-specific risk be diversified away by investing in both Bumi Teknokultura and Budi Starch 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 Bumi Teknokultura and Budi Starch into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Bumi Teknokultura Unggul and Budi Starch Sweetener, you can compare the effects of market volatilities on Bumi Teknokultura and Budi Starch 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 Bumi Teknokultura with a short position of Budi Starch. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bumi Teknokultura and Budi Starch.

Diversification Opportunities for Bumi Teknokultura and Budi Starch

0.13

Correlation Coefficient

Bumi Teknokultura  Budi Starch

Average diversification

The 3 months correlation between Bumi and Budi is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Bumi Teknokultura Unggul and Budi Starch Sweetener in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Budi Starch Sweetener and Bumi Teknokultura 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 Bumi Teknokultura Unggul are associated (or correlated) with Budi Starch. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Budi Starch Sweetener has no effect on the direction of Bumi Teknokultura i.e., Bumi Teknokultura and Budi Starch go up and down completely randomly.

Pair Corralation between Bumi Teknokultura and Budi Starch

Assuming the 90 days trading horizon Bumi Teknokultura Unggul is expected to generate 18.92 times more return on investment than Budi Starch. However, Bumi Teknokultura is 18.92 times more volatile than Budi Starch Sweetener. It trades about 0.07 of its potential returns per unit of risk. Budi Starch Sweetener is currently generating about -0.01 per unit of risk. If you would invest  400.00  in Bumi Teknokultura Unggul on September 30, 2024 and sell it today you would lose (100.00) from holding Bumi Teknokultura Unggul or give up 25.0% of portfolio value over 90 days.

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

Bumi Teknokultura Unggul  vs.  Budi Starch Sweetener

Bumi Teknokultura Unggul

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Bumi Teknokultura Unggul are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Bumi Teknokultura disclosed solid returns over the last few months and may actually be approaching a breakup point.

Budi Starch Sweetener

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Budi Starch Sweetener has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent forward-looking signals, Budi Starch is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Bumi Teknokultura and Budi Starch

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

The idea behind Bumi Teknokultura Unggul and Budi Starch Sweetener 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 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..