Correlation Between Major Drilling and PT Jasa

Can any of the company-specific risk be diversified away by investing in both Major Drilling and PT Jasa 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 Major Drilling and PT Jasa into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Major Drilling Group and PT Jasa Marga, you can compare the effects of market volatilities on Major Drilling and PT Jasa 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 Major Drilling with a short position of PT Jasa. Check out your portfolio center. Please also check ongoing floating volatility patterns of Major Drilling and PT Jasa.

Diversification Opportunities for Major Drilling and PT Jasa

-0.26

Correlation Coefficient

Major Drilling  PT Jasa

Very good diversification

The 3 months correlation between Major and 0JM is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Major Drilling Group and PT Jasa Marga in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PT Jasa Marga and Major Drilling 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 Major Drilling Group are associated (or correlated) with PT Jasa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PT Jasa Marga has no effect on the direction of Major Drilling i.e., Major Drilling and PT Jasa go up and down completely randomly.

Pair Corralation between Major Drilling and PT Jasa

Assuming the 90 days horizon Major Drilling Group is expected to under-perform the PT Jasa. But the stock apears to be less risky and, when comparing its historical volatility, Major Drilling Group is 1.22 times less risky than PT Jasa. The stock trades about -0.01 of its potential returns per unit of risk. The PT Jasa Marga is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  27.00  in PT Jasa Marga on September 30, 2024 and sell it today you would earn a total of  0.00  from holding PT Jasa Marga or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Major Drilling Group  vs.  PT Jasa Marga

Major Drilling Group

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Major Drilling Group are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Major Drilling is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

PT Jasa Marga

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in PT Jasa Marga are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, PT Jasa is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Major Drilling and PT Jasa

The main advantage of trading using opposite Major Drilling and PT Jasa positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Major Drilling position performs unexpectedly, PT Jasa 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 PT Jasa will offset losses from the drop in PT Jasa's long position.

The idea behind Major Drilling Group and PT Jasa Marga pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 CEOs Directory module to screen CEOs from public companies around the world.