Correlation Between Indonesian Tobacco and PT Jobubu
Can any of the company-specific risk be diversified away by investing in both Indonesian Tobacco and PT Jobubu 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 Indonesian Tobacco and PT Jobubu into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Indonesian Tobacco Tbk and PT Jobubu Jarum, you can compare the effects of market volatilities on Indonesian Tobacco and PT Jobubu 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 Indonesian Tobacco with a short position of PT Jobubu. Check out your portfolio center. Please also check ongoing floating volatility patterns of Indonesian Tobacco and PT Jobubu.
Diversification Opportunities for Indonesian Tobacco and PT Jobubu
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Indonesian and BEER is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Indonesian Tobacco Tbk and PT Jobubu Jarum in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PT Jobubu Jarum and Indonesian Tobacco 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 Indonesian Tobacco Tbk are associated (or correlated) with PT Jobubu. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PT Jobubu Jarum has no effect on the direction of Indonesian Tobacco i.e., Indonesian Tobacco and PT Jobubu go up and down completely randomly.
Pair Corralation between Indonesian Tobacco and PT Jobubu
Assuming the 90 days trading horizon Indonesian Tobacco Tbk is expected to generate 0.41 times more return on investment than PT Jobubu. However, Indonesian Tobacco Tbk is 2.46 times less risky than PT Jobubu. It trades about -0.04 of its potential returns per unit of risk. PT Jobubu Jarum is currently generating about -0.07 per unit of risk. If you would invest 28,651 in Indonesian Tobacco Tbk on November 28, 2024 and sell it today you would lose (6,051) from holding Indonesian Tobacco Tbk or give up 21.12% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Indonesian Tobacco Tbk vs. PT Jobubu Jarum
Performance |
| Timeline |
| Indonesian Tobacco Tbk |
| PT Jobubu Jarum |
Indonesian Tobacco and PT Jobubu Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Indonesian Tobacco and PT Jobubu
The main advantage of trading using opposite Indonesian Tobacco and PT Jobubu positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Indonesian Tobacco position performs unexpectedly, PT Jobubu 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 Jobubu will offset losses from the drop in PT Jobubu's long position.| Indonesian Tobacco vs. Wismilak Inti Makmur | Indonesian Tobacco vs. J Resources Asia | Indonesian Tobacco vs. Transcoal Pacific Tbk | Indonesian Tobacco vs. Garudafood Putra Putri |
| PT Jobubu vs. PT Hetzer Medical | PT Jobubu vs. HK Metals Utama | PT Jobubu vs. Humpuss Intermoda Transportasi | PT Jobubu vs. PT Hatten Bali |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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