Correlation Between Red Planet and Jakarta Int
Can any of the company-specific risk be diversified away by investing in both Red Planet and Jakarta Int 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 Red Planet and Jakarta Int into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Red Planet Indonesia and Jakarta Int Hotels, you can compare the effects of market volatilities on Red Planet and Jakarta Int 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 Red Planet with a short position of Jakarta Int. Check out your portfolio center. Please also check ongoing floating volatility patterns of Red Planet and Jakarta Int.
Diversification Opportunities for Red Planet and Jakarta Int
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Red and Jakarta is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Red Planet Indonesia and Jakarta Int Hotels in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jakarta Int Hotels and Red Planet 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 Red Planet Indonesia are associated (or correlated) with Jakarta Int. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jakarta Int Hotels has no effect on the direction of Red Planet i.e., Red Planet and Jakarta Int go up and down completely randomly.
Pair Corralation between Red Planet and Jakarta Int
Assuming the 90 days trading horizon Red Planet is expected to generate 1.99 times less return on investment than Jakarta Int. But when comparing it to its historical volatility, Red Planet Indonesia is 2.38 times less risky than Jakarta Int. It trades about 0.42 of its potential returns per unit of risk. Jakarta Int Hotels is currently generating about 0.35 of returns per unit of risk over similar time horizon. If you would invest 95,000 in Jakarta Int Hotels on September 5, 2024 and sell it today you would earn a total of 106,000 from holding Jakarta Int Hotels or generate 111.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Red Planet Indonesia vs. Jakarta Int Hotels
Performance |
| Timeline |
| Red Planet Indonesia |
| Jakarta Int Hotels |
Red Planet and Jakarta Int Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Red Planet and Jakarta Int
The main advantage of trading using opposite Red Planet and Jakarta Int positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Red Planet position performs unexpectedly, Jakarta Int 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 Int will offset losses from the drop in Jakarta Int's long position.| Red Planet vs. Asuransi Harta Aman | Red Planet vs. Indosterling Technomedia Tbk | Red Planet vs. Indosat Tbk | Red Planet vs. Bank Negara Indonesia |
| Jakarta Int vs. Asuransi Harta Aman | Jakarta Int vs. Indosterling Technomedia Tbk | Jakarta Int vs. Indosat Tbk | Jakarta Int vs. Bank Negara Indonesia |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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