Correlation Between Sentral Mitra and J Resources
Can any of the company-specific risk be diversified away by investing in both Sentral Mitra and J Resources 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 Sentral Mitra and J Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sentral Mitra Informatika and J Resources Asia, you can compare the effects of market volatilities on Sentral Mitra and J Resources 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 Sentral Mitra with a short position of J Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sentral Mitra and J Resources.
Diversification Opportunities for Sentral Mitra and J Resources
0.51 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Sentral and PSAB is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Sentral Mitra Informatika and J Resources Asia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on J Resources Asia and Sentral Mitra 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 Sentral Mitra Informatika are associated (or correlated) with J Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of J Resources Asia has no effect on the direction of Sentral Mitra i.e., Sentral Mitra and J Resources go up and down completely randomly.
Pair Corralation between Sentral Mitra and J Resources
Assuming the 90 days trading horizon Sentral Mitra is expected to generate 12.39 times less return on investment than J Resources. But when comparing it to its historical volatility, Sentral Mitra Informatika is 1.05 times less risky than J Resources. It trades about 0.01 of its potential returns per unit of risk. J Resources Asia is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 13,100 in J Resources Asia on August 28, 2024 and sell it today you would earn a total of 17,300 from holding J Resources Asia or generate 132.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sentral Mitra Informatika vs. J Resources Asia
Performance |
| Timeline |
| Sentral Mitra Informatika |
| J Resources Asia |
Sentral Mitra and J Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sentral Mitra and J Resources
The main advantage of trading using opposite Sentral Mitra and J Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sentral Mitra position performs unexpectedly, J Resources 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 J Resources will offset losses from the drop in J Resources' long position.| Sentral Mitra vs. PT Dewi Shri | Sentral Mitra vs. PT Arkora Hydro | Sentral Mitra vs. Habco Trans Maritima | Sentral Mitra vs. PT Jhonlin Agro |
| J Resources vs. Kedaung Indah Can | J Resources vs. Langgeng Makmur Industri | J Resources vs. Kabelindo Murni Tbk | J Resources vs. Mustika Ratu 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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