Correlation Between Bank Rakyat and Jaya Sukses

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Can any of the company-specific risk be diversified away by investing in both Bank Rakyat and Jaya Sukses 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 Bank Rakyat and Jaya Sukses into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bank Rakyat Indonesia and Jaya Sukses Makmur, you can compare the effects of market volatilities on Bank Rakyat and Jaya Sukses 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 Bank Rakyat with a short position of Jaya Sukses. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank Rakyat and Jaya Sukses.

Diversification Opportunities for Bank Rakyat and Jaya Sukses

-0.66
  Correlation Coefficient

Excellent diversification

The 3 months correlation between Bank and Jaya is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Bank Rakyat Indonesia and Jaya Sukses Makmur in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jaya Sukses Makmur and Bank Rakyat 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 Bank Rakyat Indonesia are associated (or correlated) with Jaya Sukses. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jaya Sukses Makmur has no effect on the direction of Bank Rakyat i.e., Bank Rakyat and Jaya Sukses go up and down completely randomly.

Pair Corralation between Bank Rakyat and Jaya Sukses

Assuming the 90 days trading horizon Bank Rakyat Indonesia is expected to generate 4.38 times more return on investment than Jaya Sukses. However, Bank Rakyat is 4.38 times more volatile than Jaya Sukses Makmur. It trades about 0.09 of its potential returns per unit of risk. Jaya Sukses Makmur is currently generating about 0.05 per unit of risk. If you would invest  407,138  in Bank Rakyat Indonesia on October 23, 2024 and sell it today you would earn a total of  14,862  from holding Bank Rakyat Indonesia or generate 3.65% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Bank Rakyat Indonesia  vs.  Jaya Sukses Makmur

 Performance 
       Timeline  
Bank Rakyat Indonesia 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Bank Rakyat Indonesia has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's forward-looking signals remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.
Jaya Sukses Makmur 

Risk-Adjusted Performance

10 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Jaya Sukses Makmur are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Jaya Sukses may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Bank Rakyat and Jaya Sukses Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Bank Rakyat and Jaya Sukses

The main advantage of trading using opposite Bank Rakyat and Jaya Sukses positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank Rakyat position performs unexpectedly, Jaya Sukses 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 Jaya Sukses will offset losses from the drop in Jaya Sukses' long position.
The idea behind Bank Rakyat Indonesia and Jaya Sukses Makmur 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 Stocks Directory module to find actively traded stocks across global markets.

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