Correlation Between Jakarta Int and Tirta Mahakam

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Can any of the company-specific risk be diversified away by investing in both Jakarta Int and Tirta Mahakam 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 Tirta Mahakam 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 Tirta Mahakam Resources, you can compare the effects of market volatilities on Jakarta Int and Tirta Mahakam 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 Tirta Mahakam. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jakarta Int and Tirta Mahakam.

Diversification Opportunities for Jakarta Int and Tirta Mahakam

-0.32
  Correlation Coefficient

Very good diversification

The 3 months correlation between Jakarta and Tirta is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Jakarta Int Hotels and Tirta Mahakam Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tirta Mahakam Resources 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 Tirta Mahakam. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tirta Mahakam Resources has no effect on the direction of Jakarta Int i.e., Jakarta Int and Tirta Mahakam go up and down completely randomly.

Pair Corralation between Jakarta Int and Tirta Mahakam

Assuming the 90 days trading horizon Jakarta Int is expected to generate 1.22 times less return on investment than Tirta Mahakam. In addition to that, Jakarta Int is 1.77 times more volatile than Tirta Mahakam Resources. It trades about 0.15 of its total potential returns per unit of risk. Tirta Mahakam Resources is currently generating about 0.32 per unit of volatility. If you would invest  2,400  in Tirta Mahakam Resources on September 6, 2024 and sell it today you would earn a total of  1,300  from holding Tirta Mahakam Resources or generate 54.17% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Jakarta Int Hotels  vs.  Tirta Mahakam Resources

 Performance 
       Timeline  
Jakarta Int Hotels 

Risk-Adjusted Performance

23 of 100

 
Weak
 
Strong
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in Jakarta Int Hotels are ranked lower than 23 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Jakarta Int disclosed solid returns over the last few months and may actually be approaching a breakup point.
Tirta Mahakam Resources 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Tirta Mahakam Resources has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's forward-looking signals remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Jakarta Int and Tirta Mahakam Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Jakarta Int and Tirta Mahakam

The main advantage of trading using opposite Jakarta Int and Tirta Mahakam positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Jakarta Int position performs unexpectedly, Tirta Mahakam 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 Tirta Mahakam will offset losses from the drop in Tirta Mahakam's long position.
The idea behind Jakarta Int Hotels and Tirta Mahakam Resources pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Commodity Directory module to find actively traded commodities issued by global exchanges.

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