Correlation Between Citra Borneo and Jayamas Medica

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

By analyzing existing cross correlation between Citra Borneo Utama and Jayamas Medica Industri, you can compare the effects of market volatilities on Citra Borneo and Jayamas Medica 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 Citra Borneo with a short position of Jayamas Medica. Check out your portfolio center. Please also check ongoing floating volatility patterns of Citra Borneo and Jayamas Medica.

Diversification Opportunities for Citra Borneo and Jayamas Medica

-0.6

Correlation Coefficient

Citra Borneo  Jayamas Medica

Excellent diversification

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

Pair Corralation between Citra Borneo and Jayamas Medica

Assuming the 90 days trading horizon Citra Borneo Utama is expected to under-perform the Jayamas Medica. In addition to that, Citra Borneo is 2.32 times more volatile than Jayamas Medica Industri. It trades about -0.11 of its total potential returns per unit of risk. Jayamas Medica Industri is currently generating about -0.15 per unit of volatility. If you would invest  18,900  in Jayamas Medica Industri on October 7, 2024 and sell it today you would lose (800.00) from holding Jayamas Medica Industri or give up 4.23% of portfolio value over 90 days.

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

Citra Borneo Utama  vs.  Jayamas Medica Industri

Citra Borneo Utama

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Citra Borneo Utama 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 February 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Jayamas Medica Industri

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Jayamas Medica Industri are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent forward-looking signals, Jayamas Medica 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 Citra Borneo and Jayamas Medica

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

The idea behind Citra Borneo Utama and Jayamas Medica Industri 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.