Correlation Between Bintang Samudera and PT Jobubu

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

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

Diversification Opportunities for Bintang Samudera and PT Jobubu

-0.74

Correlation Coefficient

Bintang Samudera  PT Jobubu

Pay attention - limited upside

The 3 months correlation between Bintang and BEER is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding Bintang Samudera Mandiri and PT Jobubu Jarum in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PT Jobubu Jarum and Bintang Samudera 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 Bintang Samudera Mandiri are associated (or correlated) with PT Jobubu. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PT Jobubu Jarum has no effect on the direction of Bintang Samudera i.e., Bintang Samudera and PT Jobubu go up and down completely randomly.

Pair Corralation between Bintang Samudera and PT Jobubu

Assuming the 90 days trading horizon Bintang Samudera Mandiri is expected to generate 1.52 times more return on investment than PT Jobubu. However, Bintang Samudera is 1.52 times more volatile than PT Jobubu Jarum. It trades about -0.02 of its potential returns per unit of risk. PT Jobubu Jarum is currently generating about -0.05 per unit of risk. If you would invest  34,195  in Bintang Samudera Mandiri on October 26, 2024 and sell it today you would lose (20,195) from holding Bintang Samudera Mandiri or give up 59.06% of portfolio value over 90 days.

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

Bintang Samudera Mandiri  vs.  PT Jobubu Jarum

Bintang Samudera Mandiri

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Bintang Samudera Mandiri are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Bintang Samudera disclosed solid returns over the last few months and may actually be approaching a breakup point.

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 latest conflicting performance, the Stock's forward-looking signals remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Pair Trading with Bintang Samudera and PT Jobubu

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

The idea behind Bintang Samudera Mandiri and PT Jobubu Jarum 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.