Correlation Between Kawasan Industri and Jakarta Int
Can any of the company-specific risk be diversified away by investing in both Kawasan Industri and Jakarta Int 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 Kawasan Industri and Jakarta Int into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kawasan Industri Jababeka and Jakarta Int Hotels, you can compare the effects of market volatilities on Kawasan Industri and Jakarta Int 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 Kawasan Industri with a short position of Jakarta Int. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kawasan Industri and Jakarta Int.
Diversification Opportunities for Kawasan Industri and Jakarta Int
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Kawasan and Jakarta is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Kawasan Industri Jababeka and Jakarta Int Hotels in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jakarta Int Hotels and Kawasan Industri 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 Kawasan Industri Jababeka are associated (or correlated) with Jakarta Int. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jakarta Int Hotels has no effect on the direction of Kawasan Industri i.e., Kawasan Industri and Jakarta Int go up and down completely randomly.
Pair Corralation between Kawasan Industri and Jakarta Int
Assuming the 90 days trading horizon Kawasan Industri is expected to generate 26.61 times less return on investment than Jakarta Int. But when comparing it to its historical volatility, Kawasan Industri Jababeka is 7.05 times less risky than Jakarta Int. It trades about 0.13 of its potential returns per unit of risk. Jakarta Int Hotels is currently generating about 0.48 of returns per unit of risk over similar time horizon. If you would invest 34,000 in Jakarta Int Hotels on August 30, 2024 and sell it today you would earn a total of 157,000 from holding Jakarta Int Hotels or generate 461.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kawasan Industri Jababeka vs. Jakarta Int Hotels
Performance |
| Timeline |
| Kawasan Industri Jababeka |
| Jakarta Int Hotels |
Kawasan Industri and Jakarta Int Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kawasan Industri and Jakarta Int
The main advantage of trading using opposite Kawasan Industri and Jakarta Int positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kawasan Industri position performs unexpectedly, Jakarta Int 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 Jakarta Int will offset losses from the drop in Jakarta Int's long position.| Kawasan Industri vs. Bakrieland Development Tbk | Kawasan Industri vs. Ciputra Development Tbk | Kawasan Industri vs. Sentul City Tbk | Kawasan Industri vs. Solusi Bangun Indonesia |
| Jakarta Int vs. Jaya Real Property | Jakarta Int vs. Mnc Land Tbk | Jakarta Int vs. Kawasan Industri Jababeka | Jakarta Int vs. Duta Pertiwi 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 Global Correlations module to find global opportunities by holding instruments from different markets.
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