Correlation Between J Resources and Steel Pipe
Can any of the company-specific risk be diversified away by investing in both J Resources and Steel Pipe 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 J Resources and Steel Pipe into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between J Resources Asia and Steel Pipe Industry, you can compare the effects of market volatilities on J Resources and Steel Pipe 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 J Resources with a short position of Steel Pipe. Check out your portfolio center. Please also check ongoing floating volatility patterns of J Resources and Steel Pipe.
Diversification Opportunities for J Resources and Steel Pipe
-0.37 | Correlation Coefficient |
Very good diversification
The 3 months correlation between PSAB and Steel is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding J Resources Asia and Steel Pipe Industry in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Steel Pipe Industry and J Resources 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 J Resources Asia are associated (or correlated) with Steel Pipe. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Steel Pipe Industry has no effect on the direction of J Resources i.e., J Resources and Steel Pipe go up and down completely randomly.
Pair Corralation between J Resources and Steel Pipe
Assuming the 90 days trading horizon J Resources Asia is expected to generate 3.56 times more return on investment than Steel Pipe. However, J Resources is 3.56 times more volatile than Steel Pipe Industry. It trades about -0.09 of its potential returns per unit of risk. Steel Pipe Industry is currently generating about -0.37 per unit of risk. If you would invest 32,000 in J Resources Asia on September 1, 2024 and sell it today you would lose (1,800) from holding J Resources Asia or give up 5.62% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
J Resources Asia vs. Steel Pipe Industry
Performance |
| Timeline |
| J Resources Asia |
| Steel Pipe Industry |
J Resources and Steel Pipe Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with J Resources and Steel Pipe
The main advantage of trading using opposite J Resources and Steel Pipe positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if J Resources position performs unexpectedly, Steel Pipe 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 Steel Pipe will offset losses from the drop in Steel Pipe's long position.| J Resources vs. Merdeka Copper Gold | J Resources vs. Golden Eagle Energy | J Resources vs. Rukun Raharja Tbk | J Resources vs. Wilton Makmur Indonesia |
| Steel Pipe vs. Perusahaan Gas Negara | Steel Pipe vs. Vale Indonesia Tbk | Steel Pipe vs. Telkom Indonesia Tbk | Steel Pipe vs. Mitra Pinasthika Mustika |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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