Correlation Between Pembangunan Jaya and Red Planet
Can any of the company-specific risk be diversified away by investing in both Pembangunan Jaya and Red Planet 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 Red Planet 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 Red Planet Indonesia, you can compare the effects of market volatilities on Pembangunan Jaya and Red Planet 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 Red Planet. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pembangunan Jaya and Red Planet.
Diversification Opportunities for Pembangunan Jaya and Red Planet
-0.09 | Correlation Coefficient |
Good diversification
The 3 months correlation between Pembangunan and Red is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Pembangunan Jaya Ancol and Red Planet Indonesia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Red Planet 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 Red Planet. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Red Planet Indonesia has no effect on the direction of Pembangunan Jaya i.e., Pembangunan Jaya and Red Planet go up and down completely randomly.
Pair Corralation between Pembangunan Jaya and Red Planet
Assuming the 90 days trading horizon Pembangunan Jaya Ancol is expected to under-perform the Red Planet. But the stock apears to be less risky and, when comparing its historical volatility, Pembangunan Jaya Ancol is 6.25 times less risky than Red Planet. The stock trades about -0.27 of its potential returns per unit of risk. The Red Planet Indonesia is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 2,300 in Red Planet Indonesia on August 25, 2024 and sell it today you would earn a total of 0.00 from holding Red Planet Indonesia or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Pembangunan Jaya Ancol vs. Red Planet Indonesia
Performance |
| Timeline |
| Pembangunan Jaya Ancol |
| Red Planet Indonesia |
Pembangunan Jaya and Red Planet Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pembangunan Jaya and Red Planet
The main advantage of trading using opposite Pembangunan Jaya and Red Planet positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pembangunan Jaya position performs unexpectedly, Red Planet 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 Red Planet will offset losses from the drop in Red Planet'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 |
| Red Planet vs. Pembangunan Graha Lestari | Red Planet vs. Pudjiadi Sons Tbk | Red Planet vs. Pioneerindo Gourmet International | Red Planet vs. Pembangunan Jaya Ancol |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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