Correlation Between PT Bumi and ZTO EXPRESS

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

Diversification Opportunities for PT Bumi and ZTO EXPRESS

-0.37

Correlation Coefficient

PT Bumi  ZTO EXPRESS

Very good diversification

The 3 months correlation between PJM and ZTO is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding PT Bumi Resources and ZTO EXPRESS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ZTO EXPRESS 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 ZTO EXPRESS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ZTO EXPRESS has no effect on the direction of PT Bumi i.e., PT Bumi and ZTO EXPRESS go up and down completely randomly.

Pair Corralation between PT Bumi and ZTO EXPRESS

Assuming the 90 days horizon PT Bumi Resources is expected to generate 4.01 times more return on investment than ZTO EXPRESS. However, PT Bumi is 4.01 times more volatile than ZTO EXPRESS. It trades about 0.07 of its potential returns per unit of risk. ZTO EXPRESS is currently generating about 0.01 per unit of risk. 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 Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

PT Bumi Resources  vs.  ZTO EXPRESS

PT Bumi Resources

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in PT Bumi Resources are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, PT Bumi reported solid returns over the last few months and may actually be approaching a breakup point.

ZTO EXPRESS

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in ZTO EXPRESS are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, ZTO EXPRESS is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with PT Bumi and ZTO EXPRESS

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

The idea behind PT Bumi Resources and ZTO EXPRESS 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.