Correlation Between Royalindo Investa and Jaya Konstruksi

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

By analyzing existing cross correlation between Royalindo Investa Wijaya and Jaya Konstruksi Manggala, you can compare the effects of market volatilities on Royalindo Investa and Jaya Konstruksi 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 Royalindo Investa with a short position of Jaya Konstruksi. Check out your portfolio center. Please also check ongoing floating volatility patterns of Royalindo Investa and Jaya Konstruksi.

Diversification Opportunities for Royalindo Investa and Jaya Konstruksi

-0.57

Correlation Coefficient

Royalindo Investa  Jaya Konstruksi

Excellent diversification

The 3 months correlation between Royalindo and Jaya is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Royalindo Investa Wijaya and Jaya Konstruksi Manggala in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jaya Konstruksi Manggala and Royalindo Investa 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 Royalindo Investa Wijaya are associated (or correlated) with Jaya Konstruksi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jaya Konstruksi Manggala has no effect on the direction of Royalindo Investa i.e., Royalindo Investa and Jaya Konstruksi go up and down completely randomly.

Pair Corralation between Royalindo Investa and Jaya Konstruksi

Assuming the 90 days trading horizon Royalindo Investa Wijaya is expected to generate 1.11 times more return on investment than Jaya Konstruksi. However, Royalindo Investa is 1.11 times more volatile than Jaya Konstruksi Manggala. It trades about 0.03 of its potential returns per unit of risk. Jaya Konstruksi Manggala is currently generating about -0.01 per unit of risk. If you would invest  10,000  in Royalindo Investa Wijaya on October 12, 2024 and sell it today you would earn a total of  1,000.00  from holding Royalindo Investa Wijaya or generate 10.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	99.45%
Values	Daily Returns

Royalindo Investa Wijaya  vs.  Jaya Konstruksi Manggala

Royalindo Investa Wijaya

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Royalindo Investa Wijaya are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Royalindo Investa may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Jaya Konstruksi Manggala

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Jaya Konstruksi Manggala 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.

Pair Trading with Royalindo Investa and Jaya Konstruksi

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

The idea behind Royalindo Investa Wijaya and Jaya Konstruksi Manggala 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.