Correlation Between Jakarta Int and Indah Kiat
Can any of the company-specific risk be diversified away by investing in both Jakarta Int and Indah Kiat 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 Indah Kiat 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 Indah Kiat Pulp, you can compare the effects of market volatilities on Jakarta Int and Indah Kiat 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 Indah Kiat. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jakarta Int and Indah Kiat.
Diversification Opportunities for Jakarta Int and Indah Kiat
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Jakarta and Indah is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Jakarta Int Hotels and Indah Kiat Pulp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Indah Kiat Pulp 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 Indah Kiat. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Indah Kiat Pulp has no effect on the direction of Jakarta Int i.e., Jakarta Int and Indah Kiat go up and down completely randomly.
Pair Corralation between Jakarta Int and Indah Kiat
Assuming the 90 days trading horizon Jakarta Int Hotels is expected to under-perform the Indah Kiat. In addition to that, Jakarta Int is 1.6 times more volatile than Indah Kiat Pulp. It trades about -0.34 of its total potential returns per unit of risk. Indah Kiat Pulp is currently generating about -0.35 per unit of volatility. If you would invest 660,000 in Indah Kiat Pulp on December 1, 2024 and sell it today you would lose (166,000) from holding Indah Kiat Pulp or give up 25.15% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Jakarta Int Hotels vs. Indah Kiat Pulp
Performance |
| Timeline |
| Jakarta Int Hotels |
| Indah Kiat Pulp |
Jakarta Int and Indah Kiat Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Jakarta Int and Indah Kiat
The main advantage of trading using opposite Jakarta Int and Indah Kiat positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Jakarta Int position performs unexpectedly, Indah Kiat 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 Indah Kiat will offset losses from the drop in Indah Kiat'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 |
| Indah Kiat vs. Pabrik Kertas Tjiwi | Indah Kiat vs. Indocement Tunggal Prakarsa | Indah Kiat vs. Barito Pacific Tbk | Indah Kiat vs. United Tractors 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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