Correlation Between PT Jobubu and Smartfren Telecom

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

By analyzing existing cross correlation between PT Jobubu Jarum and Smartfren Telecom Tbk, you can compare the effects of market volatilities on PT Jobubu and Smartfren Telecom 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 PT Jobubu with a short position of Smartfren Telecom. Check out your portfolio center. Please also check ongoing floating volatility patterns of PT Jobubu and Smartfren Telecom.

Diversification Opportunities for PT Jobubu and Smartfren Telecom

0.6

Correlation Coefficient

PT Jobubu  Smartfren Telecom

Poor diversification

The 3 months correlation between BEER and Smartfren is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding PT Jobubu Jarum and Smartfren Telecom Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Smartfren Telecom Tbk and PT Jobubu 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 PT Jobubu Jarum are associated (or correlated) with Smartfren Telecom. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Smartfren Telecom Tbk has no effect on the direction of PT Jobubu i.e., PT Jobubu and Smartfren Telecom go up and down completely randomly.

Pair Corralation between PT Jobubu and Smartfren Telecom

Assuming the 90 days trading horizon PT Jobubu Jarum is expected to generate 0.42 times more return on investment than Smartfren Telecom. However, PT Jobubu Jarum is 2.4 times less risky than Smartfren Telecom. It trades about -0.15 of its potential returns per unit of risk. Smartfren Telecom Tbk is currently generating about -0.06 per unit of risk. If you would invest  19,500  in PT Jobubu Jarum on September 3, 2024 and sell it today you would lose (2,700) from holding PT Jobubu Jarum or give up 13.85% of portfolio value over 90 days.

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

PT Jobubu Jarum  vs.  Smartfren Telecom Tbk

PT Jobubu Jarum

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PT Jobubu Jarum has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's forward-looking signals remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Smartfren Telecom Tbk

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Smartfren Telecom Tbk has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's forward-looking signals remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with PT Jobubu and Smartfren Telecom

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

The idea behind PT Jobubu Jarum and Smartfren Telecom Tbk 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.