Correlation Between Indospring Tbk and Jaya Sukses

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

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

Diversification Opportunities for Indospring Tbk and Jaya Sukses

-0.81

Correlation Coefficient

Indospring Tbk  Jaya Sukses

Pay attention - limited upside

The 3 months correlation between Indospring and Jaya is -0.81. Overlapping area represents the amount of risk that can be diversified away by holding Indospring Tbk and Jaya Sukses Makmur in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jaya Sukses Makmur and Indospring Tbk 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 Indospring Tbk are associated (or correlated) with Jaya Sukses. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jaya Sukses Makmur has no effect on the direction of Indospring Tbk i.e., Indospring Tbk and Jaya Sukses go up and down completely randomly.

Pair Corralation between Indospring Tbk and Jaya Sukses

Assuming the 90 days trading horizon Indospring Tbk is expected to under-perform the Jaya Sukses. In addition to that, Indospring Tbk is 1.38 times more volatile than Jaya Sukses Makmur. It trades about -0.16 of its total potential returns per unit of risk. Jaya Sukses Makmur is currently generating about 0.2 per unit of volatility. If you would invest  99,500  in Jaya Sukses Makmur on October 26, 2024 and sell it today you would earn a total of  7,000  from holding Jaya Sukses Makmur or generate 7.04% return on investment over 90 days.

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

Indospring Tbk  vs.  Jaya Sukses Makmur

Indospring Tbk

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Indospring Tbk 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.

Jaya Sukses Makmur

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Jaya Sukses Makmur are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Jaya Sukses may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Indospring Tbk and Jaya Sukses

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

The idea behind Indospring Tbk and Jaya Sukses Makmur 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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.