Correlation Between PT Indonesia and Jaya Sukses
Can any of the company-specific risk be diversified away by investing in both PT Indonesia 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 PT Indonesia and Jaya Sukses into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PT Indonesia Kendaraan and Jaya Sukses Makmur, you can compare the effects of market volatilities on PT Indonesia 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 PT Indonesia with a short position of Jaya Sukses. Check out your portfolio center. Please also check ongoing floating volatility patterns of PT Indonesia and Jaya Sukses.
Diversification Opportunities for PT Indonesia and Jaya Sukses
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between IPCC and Jaya is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding PT Indonesia Kendaraan 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 PT Indonesia 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 Indonesia Kendaraan 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 PT Indonesia i.e., PT Indonesia and Jaya Sukses go up and down completely randomly.
Pair Corralation between PT Indonesia and Jaya Sukses
Assuming the 90 days trading horizon PT Indonesia is expected to generate 1.37 times less return on investment than Jaya Sukses. In addition to that, PT Indonesia is 2.27 times more volatile than Jaya Sukses Makmur. It trades about 0.07 of its total potential returns per unit of risk. Jaya Sukses Makmur is currently generating about 0.21 per unit of volatility. If you would invest 99,000 in Jaya Sukses Makmur on September 19, 2024 and sell it today you would earn a total of 6,500 from holding Jaya Sukses Makmur or generate 6.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
PT Indonesia Kendaraan vs. Jaya Sukses Makmur
Performance |
| Timeline |
| PT Indonesia Kendaraan |
| Jaya Sukses Makmur |
PT Indonesia and Jaya Sukses Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PT Indonesia and Jaya Sukses
The main advantage of trading using opposite PT Indonesia and Jaya Sukses positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PT Indonesia 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.| PT Indonesia vs. Jasa Armada Indonesia | PT Indonesia vs. Cikarang Listrindo Tbk | PT Indonesia vs. Mitra Pinasthika Mustika | PT Indonesia vs. Wijaya Karya Bangunan |
| Jaya Sukses vs. PT Indonesia Kendaraan | Jaya Sukses vs. Surya Toto Indonesia | Jaya Sukses vs. Mitra Pinasthika Mustika | Jaya Sukses vs. Integra Indocabinet 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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