Correlation Between Asuransi Ramayana and Asuransi Jasa

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

By analyzing existing cross correlation between Asuransi Ramayana Tbk and Asuransi Jasa Tania, you can compare the effects of market volatilities on Asuransi Ramayana and Asuransi 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 Asuransi Ramayana with a short position of Asuransi Jasa. Check out your portfolio center. Please also check ongoing floating volatility patterns of Asuransi Ramayana and Asuransi Jasa.

Diversification Opportunities for Asuransi Ramayana and Asuransi Jasa

0.14

Correlation Coefficient

Asuransi Ramayana  Asuransi Jasa

Average diversification

The 3 months correlation between Asuransi and Asuransi is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Asuransi Ramayana Tbk and Asuransi Jasa Tania in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Asuransi Jasa Tania and Asuransi Ramayana 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 Asuransi Ramayana Tbk are associated (or correlated) with Asuransi Jasa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Asuransi Jasa Tania has no effect on the direction of Asuransi Ramayana i.e., Asuransi Ramayana and Asuransi Jasa go up and down completely randomly.

Pair Corralation between Asuransi Ramayana and Asuransi Jasa

Assuming the 90 days trading horizon Asuransi Ramayana Tbk is expected to under-perform the Asuransi Jasa. But the stock apears to be less risky and, when comparing its historical volatility, Asuransi Ramayana Tbk is 1.49 times less risky than Asuransi Jasa. The stock trades about -0.09 of its potential returns per unit of risk. The Asuransi Jasa Tania is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  11,500  in Asuransi Jasa Tania on September 3, 2024 and sell it today you would lose (200.00) from holding Asuransi Jasa Tania or give up 1.74% of portfolio value over 90 days.

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

Asuransi Ramayana Tbk  vs.  Asuransi Jasa Tania

Asuransi Ramayana Tbk

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Asuransi Ramayana Tbk has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent forward-looking signals, Asuransi Ramayana is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Asuransi Jasa Tania

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Asuransi Jasa Tania has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent forward-looking signals, Asuransi Jasa is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Asuransi Ramayana and Asuransi Jasa

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

The idea behind Asuransi Ramayana Tbk and Asuransi Jasa Tania 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.