Correlation Between PT Bank and J+J SNACK

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

By analyzing existing cross correlation between PT Bank Rakyat and JJ SNACK FOODS, you can compare the effects of market volatilities on PT Bank and J+J SNACK 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 Bank with a short position of J+J SNACK. Check out your portfolio center. Please also check ongoing floating volatility patterns of PT Bank and J+J SNACK.

Diversification Opportunities for PT Bank and J+J SNACK

0.22

Correlation Coefficient

PT Bank  J+J SNACK

Modest diversification

The 3 months correlation between BYRA and J+J is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding PT Bank Rakyat and JJ SNACK FOODS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JJ SNACK FOODS and PT Bank 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 Bank Rakyat are associated (or correlated) with J+J SNACK. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JJ SNACK FOODS has no effect on the direction of PT Bank i.e., PT Bank and J+J SNACK go up and down completely randomly.

Pair Corralation between PT Bank and J+J SNACK

Assuming the 90 days trading horizon PT Bank Rakyat is expected to generate 3.59 times more return on investment than J+J SNACK. However, PT Bank is 3.59 times more volatile than JJ SNACK FOODS. It trades about 0.02 of its potential returns per unit of risk. JJ SNACK FOODS is currently generating about -0.17 per unit of risk. If you would invest  22.00  in PT Bank Rakyat on December 29, 2024 and sell it today you would lose (2.00) from holding PT Bank Rakyat or give up 9.09% of portfolio value over 90 days.

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

PT Bank Rakyat  vs.  JJ SNACK FOODS

PT Bank Rakyat

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in PT Bank Rakyat are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, PT Bank may actually be approaching a critical reversion point that can send shares even higher in April 2025.

JJ SNACK FOODS

Risk-Adjusted Performance

Very Weak

Over the last 90 days JJ SNACK FOODS has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with PT Bank and J+J SNACK

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

The idea behind PT Bank Rakyat and JJ SNACK FOODS 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.

Check out your portfolio center.

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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.