Correlation Between Jaya Trishindo and Sumber Energi

Can any of the company-specific risk be diversified away by investing in both Jaya Trishindo and Sumber Energi 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 Jaya Trishindo and Sumber Energi into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Jaya Trishindo Tbk and Sumber Energi Andalan, you can compare the effects of market volatilities on Jaya Trishindo and Sumber Energi 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 Jaya Trishindo with a short position of Sumber Energi. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jaya Trishindo and Sumber Energi.

Diversification Opportunities for Jaya Trishindo and Sumber Energi

0.66

Correlation Coefficient

Jaya Trishindo  Sumber Energi

Poor diversification

The 3 months correlation between Jaya and Sumber is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Jaya Trishindo Tbk and Sumber Energi Andalan in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sumber Energi Andalan and Jaya Trishindo 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 Jaya Trishindo Tbk are associated (or correlated) with Sumber Energi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sumber Energi Andalan has no effect on the direction of Jaya Trishindo i.e., Jaya Trishindo and Sumber Energi go up and down completely randomly.

Pair Corralation between Jaya Trishindo and Sumber Energi

Assuming the 90 days trading horizon Jaya Trishindo Tbk is expected to generate 1.47 times more return on investment than Sumber Energi. However, Jaya Trishindo is 1.47 times more volatile than Sumber Energi Andalan. It trades about -0.03 of its potential returns per unit of risk. Sumber Energi Andalan is currently generating about -0.06 per unit of risk. If you would invest  34,400  in Jaya Trishindo Tbk on September 14, 2024 and sell it today you would lose (4,800) from holding Jaya Trishindo Tbk or give up 13.95% of portfolio value over 90 days.

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

Jaya Trishindo Tbk  vs.  Sumber Energi Andalan

Jaya Trishindo Tbk

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Jaya Trishindo Tbk 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.

Sumber Energi Andalan

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sumber Energi Andalan 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 Jaya Trishindo and Sumber Energi

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

The idea behind Jaya Trishindo Tbk and Sumber Energi Andalan 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.