Correlation Between Bumi Benowo and Agung Podomoro

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

By analyzing existing cross correlation between Bumi Benowo Sukses and Agung Podomoro Land, you can compare the effects of market volatilities on Bumi Benowo and Agung Podomoro 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 Benowo with a short position of Agung Podomoro. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bumi Benowo and Agung Podomoro.

Diversification Opportunities for Bumi Benowo and Agung Podomoro

-0.75

Correlation Coefficient

Bumi Benowo  Agung Podomoro

Pay attention - limited upside

The 3 months correlation between Bumi and Agung is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding Bumi Benowo Sukses and Agung Podomoro Land in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Agung Podomoro Land and Bumi Benowo 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 Benowo Sukses are associated (or correlated) with Agung Podomoro. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Agung Podomoro Land has no effect on the direction of Bumi Benowo i.e., Bumi Benowo and Agung Podomoro go up and down completely randomly.

Pair Corralation between Bumi Benowo and Agung Podomoro

Assuming the 90 days trading horizon Bumi Benowo Sukses is expected to under-perform the Agung Podomoro. In addition to that, Bumi Benowo is 2.86 times more volatile than Agung Podomoro Land. It trades about -0.3 of its total potential returns per unit of risk. Agung Podomoro Land is currently generating about 0.21 per unit of volatility. If you would invest  11,100  in Agung Podomoro Land on February 20, 2024 and sell it today you would earn a total of  600.00  from holding Agung Podomoro Land or generate 5.41% return on investment over 90 days.

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

Bumi Benowo Sukses  vs.  Agung Podomoro Land

Bumi Benowo Sukses

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Bumi Benowo Sukses are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite quite weak basic indicators, Bumi Benowo disclosed solid returns over the last few months and may actually be approaching a breakup point.

Agung Podomoro Land

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Agung Podomoro Land has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Agung Podomoro 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 Benowo and Agung Podomoro

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

The idea behind Bumi Benowo Sukses and Agung Podomoro Land 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.