Correlation Between Bank Jabar and Jasa Marga

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

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

Diversification Opportunities for Bank Jabar and Jasa Marga

0.86

Correlation Coefficient

Bank Jabar  Jasa Marga

Very poor diversification

The 3 months correlation between Bank and Jasa is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Bank Jabar and Jasa Marga Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jasa Marga Tbk and Bank Jabar 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 Bank Jabar are associated (or correlated) with Jasa Marga. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jasa Marga Tbk has no effect on the direction of Bank Jabar i.e., Bank Jabar and Jasa Marga go up and down completely randomly.

Pair Corralation between Bank Jabar and Jasa Marga

Assuming the 90 days trading horizon Bank Jabar is expected to generate 0.58 times more return on investment than Jasa Marga. However, Bank Jabar is 1.73 times less risky than Jasa Marga. It trades about -0.08 of its potential returns per unit of risk. Jasa Marga Tbk is currently generating about -0.18 per unit of risk. If you would invest  99,000  in Bank Jabar on September 14, 2024 and sell it today you would lose (3,500) from holding Bank Jabar or give up 3.54% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	98.41%
Values	Daily Returns

Bank Jabar  vs.  Jasa Marga Tbk

Bank Jabar

Risk-Adjusted Performance

0 of 100

Very Weak

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

Jasa Marga Tbk

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Jasa Marga 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 Bank Jabar and Jasa Marga

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

The idea behind Bank Jabar and Jasa Marga 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.