Correlation Between PT Bumi and AAC TECHNOLOGHLDGADR

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

Diversification Opportunities for PT Bumi and AAC TECHNOLOGHLDGADR

0.02

Correlation Coefficient

PT Bumi  AAC TECHNOLOGHLDGADR

Significant diversification

The 3 months correlation between PJM and AAC is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding PT Bumi Resources and AAC TECHNOLOGHLDGADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AAC TECHNOLOGHLDGADR 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 AAC TECHNOLOGHLDGADR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AAC TECHNOLOGHLDGADR has no effect on the direction of PT Bumi i.e., PT Bumi and AAC TECHNOLOGHLDGADR go up and down completely randomly.

Pair Corralation between PT Bumi and AAC TECHNOLOGHLDGADR

Assuming the 90 days horizon PT Bumi Resources is expected to generate 4.31 times more return on investment than AAC TECHNOLOGHLDGADR. However, PT Bumi is 4.31 times more volatile than AAC TECHNOLOGHLDGADR. It trades about 0.05 of its potential returns per unit of risk. AAC TECHNOLOGHLDGADR is currently generating about 0.05 per unit of risk. If you would invest  0.55  in PT Bumi Resources on May 3, 2025 and sell it today you would earn a total of  0.00  from holding PT Bumi Resources or generate 0.0% return on investment over 90 days.

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

PT Bumi Resources  vs.  AAC TECHNOLOGHLDGADR

PT Bumi Resources

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in PT Bumi Resources are ranked lower than 4 (%) 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.

AAC TECHNOLOGHLDGADR

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in AAC TECHNOLOGHLDGADR are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, AAC TECHNOLOGHLDGADR may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Pair Trading with PT Bumi and AAC TECHNOLOGHLDGADR

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

The idea behind PT Bumi Resources and AAC TECHNOLOGHLDGADR 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.