Correlation Between Tanah Laut and Jakarta Setiabudi
Can any of the company-specific risk be diversified away by investing in both Tanah Laut and Jakarta Setiabudi 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 Tanah Laut and Jakarta Setiabudi into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tanah Laut Tbk and Jakarta Setiabudi Internasional, you can compare the effects of market volatilities on Tanah Laut and Jakarta Setiabudi 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 Tanah Laut with a short position of Jakarta Setiabudi. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tanah Laut and Jakarta Setiabudi.
Diversification Opportunities for Tanah Laut and Jakarta Setiabudi
-0.55 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Tanah and Jakarta is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Tanah Laut Tbk and Jakarta Setiabudi Internasiona in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jakarta Setiabudi and Tanah Laut 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 Tanah Laut Tbk are associated (or correlated) with Jakarta Setiabudi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jakarta Setiabudi has no effect on the direction of Tanah Laut i.e., Tanah Laut and Jakarta Setiabudi go up and down completely randomly.
Pair Corralation between Tanah Laut and Jakarta Setiabudi
Assuming the 90 days trading horizon Tanah Laut is expected to generate 67.54 times less return on investment than Jakarta Setiabudi. But when comparing it to its historical volatility, Tanah Laut Tbk is 2.66 times less risky than Jakarta Setiabudi. It trades about 0.01 of its potential returns per unit of risk. Jakarta Setiabudi Internasional is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest 135,145 in Jakarta Setiabudi Internasional on August 30, 2024 and sell it today you would earn a total of 819,855 from holding Jakarta Setiabudi Internasional or generate 606.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Tanah Laut Tbk vs. Jakarta Setiabudi Internasiona
Performance |
| Timeline |
| Tanah Laut Tbk |
| Jakarta Setiabudi |
Tanah Laut and Jakarta Setiabudi Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tanah Laut and Jakarta Setiabudi
The main advantage of trading using opposite Tanah Laut and Jakarta Setiabudi positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tanah Laut position performs unexpectedly, Jakarta Setiabudi 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 Jakarta Setiabudi will offset losses from the drop in Jakarta Setiabudi's long position.| Tanah Laut vs. Inter Delta Tbk | Tanah Laut vs. Humpuss Intermoda Transportasi | Tanah Laut vs. Fortune Indonesia Tbk | Tanah Laut vs. PT MNC Energy |
| Jakarta Setiabudi vs. Jasuindo Tiga Perkasa | Jakarta Setiabudi vs. Jakarta Int Hotels | Jakarta Setiabudi vs. Inter Delta Tbk | Jakarta Setiabudi vs. Pudjiadi Sons Tbk |
Check out your portfolio center.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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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