Correlation Between Modern Internasional and Jakarta Setiabudi
Can any of the company-specific risk be diversified away by investing in both Modern Internasional and Jakarta Setiabudi 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 Modern Internasional and Jakarta Setiabudi into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Modern Internasional Tbk and Jakarta Setiabudi Internasional, you can compare the effects of market volatilities on Modern Internasional and Jakarta Setiabudi 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 Modern Internasional with a short position of Jakarta Setiabudi. Check out your portfolio center. Please also check ongoing floating volatility patterns of Modern Internasional and Jakarta Setiabudi.
Diversification Opportunities for Modern Internasional and Jakarta Setiabudi
-0.72 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Modern and Jakarta is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding Modern Internasional Tbk and Jakarta Setiabudi Internasiona in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jakarta Setiabudi and Modern Internasional 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 Modern Internasional Tbk are associated (or correlated) with Jakarta Setiabudi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jakarta Setiabudi has no effect on the direction of Modern Internasional i.e., Modern Internasional and Jakarta Setiabudi go up and down completely randomly.
Pair Corralation between Modern Internasional and Jakarta Setiabudi
Assuming the 90 days trading horizon Modern Internasional Tbk is expected to under-perform the Jakarta Setiabudi. But the stock apears to be less risky and, when comparing its historical volatility, Modern Internasional Tbk is 1.99 times less risky than Jakarta Setiabudi. The stock trades about -0.18 of its potential returns per unit of risk. The Jakarta Setiabudi Internasional is currently generating about 0.35 of returns per unit of risk over similar time horizon. If you would invest 438,000 in Jakarta Setiabudi Internasional on August 31, 2024 and sell it today you would earn a total of 517,000 from holding Jakarta Setiabudi Internasional or generate 118.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Modern Internasional Tbk vs. Jakarta Setiabudi Internasiona
Performance |
| Timeline |
| Modern Internasional Tbk |
| Jakarta Setiabudi |
Modern Internasional and Jakarta Setiabudi Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Modern Internasional and Jakarta Setiabudi
The main advantage of trading using opposite Modern Internasional and Jakarta Setiabudi positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Modern Internasional position performs unexpectedly, Jakarta Setiabudi 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 Setiabudi will offset losses from the drop in Jakarta Setiabudi's long position.| Modern Internasional vs. Surya Citra Media | Modern Internasional vs. Intermedia Capital Tbk | Modern Internasional vs. Communication Cable Systems | Modern Internasional vs. Indosterling Technomedia Tbk |
| Jakarta Setiabudi vs. Japfa Comfeed Indonesia | Jakarta Setiabudi vs. Charoen Pokphand Indonesia | Jakarta Setiabudi vs. Erajaya Swasembada Tbk | Jakarta Setiabudi vs. Indofood Cbp Sukses |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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