Correlation Between Pembangunan Jaya and Fast Food
Can any of the company-specific risk be diversified away by investing in both Pembangunan Jaya and Fast Food 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 Pembangunan Jaya and Fast Food into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pembangunan Jaya Ancol and Fast Food Indonesia, you can compare the effects of market volatilities on Pembangunan Jaya and Fast Food 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 Pembangunan Jaya with a short position of Fast Food. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pembangunan Jaya and Fast Food.
Diversification Opportunities for Pembangunan Jaya and Fast Food
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Pembangunan and Fast is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Pembangunan Jaya Ancol and Fast Food Indonesia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fast Food Indonesia and Pembangunan Jaya 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 Pembangunan Jaya Ancol are associated (or correlated) with Fast Food. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fast Food Indonesia has no effect on the direction of Pembangunan Jaya i.e., Pembangunan Jaya and Fast Food go up and down completely randomly.
Pair Corralation between Pembangunan Jaya and Fast Food
Assuming the 90 days trading horizon Pembangunan Jaya Ancol is expected to generate 0.83 times more return on investment than Fast Food. However, Pembangunan Jaya Ancol is 1.21 times less risky than Fast Food. It trades about 0.0 of its potential returns per unit of risk. Fast Food Indonesia is currently generating about -0.07 per unit of risk. If you would invest 67,427 in Pembangunan Jaya Ancol on September 13, 2024 and sell it today you would lose (8,427) from holding Pembangunan Jaya Ancol or give up 12.5% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pembangunan Jaya Ancol vs. Fast Food Indonesia
Performance |
| Timeline |
| Pembangunan Jaya Ancol |
| Fast Food Indonesia |
Pembangunan Jaya and Fast Food Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pembangunan Jaya and Fast Food
The main advantage of trading using opposite Pembangunan Jaya and Fast Food positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pembangunan Jaya position performs unexpectedly, Fast Food 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 Fast Food will offset losses from the drop in Fast Food's long position.| Pembangunan Jaya vs. Lautan Luas Tbk | Pembangunan Jaya vs. Panorama Sentrawisata Tbk | Pembangunan Jaya vs. Multi Indocitra Tbk | Pembangunan Jaya vs. Hotel Sahid Jaya |
| Fast Food vs. Pembangunan Graha Lestari | Fast Food vs. Pembangunan Jaya Ancol | Fast Food vs. Hotel Sahid Jaya | Fast Food vs. Mitrabara Adiperdana PT |
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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