Correlation Between Jakarta Int and Vale Indonesia
Can any of the company-specific risk be diversified away by investing in both Jakarta Int and Vale Indonesia 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 Jakarta Int and Vale Indonesia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Jakarta Int Hotels and Vale Indonesia Tbk, you can compare the effects of market volatilities on Jakarta Int and Vale Indonesia 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 Jakarta Int with a short position of Vale Indonesia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jakarta Int and Vale Indonesia.
Diversification Opportunities for Jakarta Int and Vale Indonesia
-0.47 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Jakarta and Vale is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Jakarta Int Hotels and Vale Indonesia Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vale Indonesia Tbk and Jakarta Int 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 Jakarta Int Hotels are associated (or correlated) with Vale Indonesia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vale Indonesia Tbk has no effect on the direction of Jakarta Int i.e., Jakarta Int and Vale Indonesia go up and down completely randomly.
Pair Corralation between Jakarta Int and Vale Indonesia
Assuming the 90 days trading horizon Jakarta Int Hotels is expected to generate 1.9 times more return on investment than Vale Indonesia. However, Jakarta Int is 1.9 times more volatile than Vale Indonesia Tbk. It trades about 0.13 of its potential returns per unit of risk. Vale Indonesia Tbk is currently generating about -0.06 per unit of risk. If you would invest 35,800 in Jakarta Int Hotels on September 2, 2024 and sell it today you would earn a total of 261,200 from holding Jakarta Int Hotels or generate 729.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.79% |
| Values | Daily Returns |
Jakarta Int Hotels vs. Vale Indonesia Tbk
Performance |
| Timeline |
| Jakarta Int Hotels |
| Vale Indonesia Tbk |
Jakarta Int and Vale Indonesia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Jakarta Int and Vale Indonesia
The main advantage of trading using opposite Jakarta Int and Vale Indonesia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Jakarta Int position performs unexpectedly, Vale Indonesia 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 Vale Indonesia will offset losses from the drop in Vale Indonesia's long position.| Jakarta Int vs. Jaya Real Property | Jakarta Int vs. Mnc Land Tbk | Jakarta Int vs. Kawasan Industri Jababeka | Jakarta Int vs. Duta Pertiwi Tbk |
| Vale Indonesia vs. Perusahaan Gas Negara | Vale Indonesia vs. Telkom Indonesia Tbk | Vale Indonesia vs. Mitra Pinasthika Mustika | Vale Indonesia vs. Jakarta Int Hotels |
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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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