Correlation Between Jakarta Int and Supreme Cable
Can any of the company-specific risk be diversified away by investing in both Jakarta Int and Supreme Cable 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 Supreme Cable 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 Supreme Cable Manufacturing, you can compare the effects of market volatilities on Jakarta Int and Supreme Cable 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 Supreme Cable. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jakarta Int and Supreme Cable.
Diversification Opportunities for Jakarta Int and Supreme Cable
-0.13 | Correlation Coefficient |
Good diversification
The 3 months correlation between Jakarta and Supreme is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Jakarta Int Hotels and Supreme Cable Manufacturing in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Supreme Cable Manufa 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 Supreme Cable. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Supreme Cable Manufa has no effect on the direction of Jakarta Int i.e., Jakarta Int and Supreme Cable go up and down completely randomly.
Pair Corralation between Jakarta Int and Supreme Cable
Assuming the 90 days trading horizon Jakarta Int is expected to generate 3.7 times less return on investment than Supreme Cable. But when comparing it to its historical volatility, Jakarta Int Hotels is 11.69 times less risky than Supreme Cable. It trades about 0.12 of its potential returns per unit of risk. Supreme Cable Manufacturing is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 813,129 in Supreme Cable Manufacturing on September 4, 2024 and sell it today you would lose (601,129) from holding Supreme Cable Manufacturing or give up 73.93% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Jakarta Int Hotels vs. Supreme Cable Manufacturing
Performance |
| Timeline |
| Jakarta Int Hotels |
| Supreme Cable Manufa |
Jakarta Int and Supreme Cable Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Jakarta Int and Supreme Cable
The main advantage of trading using opposite Jakarta Int and Supreme Cable positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Jakarta Int position performs unexpectedly, Supreme Cable 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 Supreme Cable will offset losses from the drop in Supreme Cable'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 |
| Supreme Cable vs. Voksel Electric Tbk | Supreme Cable vs. Kmi Wire And | Supreme Cable vs. Kabelindo Murni Tbk | Supreme Cable vs. Selamat Sempurna 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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