Correlation Between SUPERNOVA METALS and PT Bumi

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

By analyzing existing cross correlation between SUPERNOVA METALS P and PT Bumi Resources, you can compare the effects of market volatilities on SUPERNOVA METALS and PT Bumi 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 SUPERNOVA METALS with a short position of PT Bumi. Check out your portfolio center. Please also check ongoing floating volatility patterns of SUPERNOVA METALS and PT Bumi.

Diversification Opportunities for SUPERNOVA METALS and PT Bumi

0.26

Correlation Coefficient

SUPERNOVA METALS  PT Bumi

Modest diversification

The 3 months correlation between SUPERNOVA and PJM is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding SUPERNOVA METALS P and PT Bumi Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PT Bumi Resources and SUPERNOVA METALS 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 SUPERNOVA METALS P are associated (or correlated) with PT Bumi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PT Bumi Resources has no effect on the direction of SUPERNOVA METALS i.e., SUPERNOVA METALS and PT Bumi go up and down completely randomly.

Pair Corralation between SUPERNOVA METALS and PT Bumi

Assuming the 90 days horizon SUPERNOVA METALS is expected to generate 8.79 times less return on investment than PT Bumi. But when comparing it to its historical volatility, SUPERNOVA METALS P is 4.74 times less risky than PT Bumi. It trades about 0.04 of its potential returns per unit of risk. PT Bumi Resources is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  0.50  in PT Bumi Resources on April 22, 2025 and sell it today you would earn a total of  0.05  from holding PT Bumi Resources or generate 10.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.44%
Values	Daily Returns

SUPERNOVA METALS P  vs.  PT Bumi Resources

SUPERNOVA METALS P

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in SUPERNOVA METALS P are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, SUPERNOVA METALS is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

PT Bumi Resources

Risk-Adjusted Performance

Modest

Over the last 90 days PT Bumi Resources has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly weak basic indicators, PT Bumi reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with SUPERNOVA METALS and PT Bumi

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

The idea behind SUPERNOVA METALS P and PT Bumi Resources 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.