Correlation Between Inter Delta and Jakarta Setiabudi

Can any of the company-specific risk be diversified away by investing in both Inter Delta and Jakarta Setiabudi 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 Inter Delta and Jakarta Setiabudi into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Inter Delta Tbk and Jakarta Setiabudi Internasional, you can compare the effects of market volatilities on Inter Delta and Jakarta Setiabudi 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 Inter Delta with a short position of Jakarta Setiabudi. Check out your portfolio center. Please also check ongoing floating volatility patterns of Inter Delta and Jakarta Setiabudi.

Diversification Opportunities for Inter Delta and Jakarta Setiabudi

0.21

Correlation Coefficient

Inter Delta  Jakarta Setiabudi

Modest diversification

The 3 months correlation between Inter and Jakarta is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Inter Delta Tbk and Jakarta Setiabudi Internasiona in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jakarta Setiabudi and Inter Delta 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 Inter Delta Tbk are associated (or correlated) with Jakarta Setiabudi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jakarta Setiabudi has no effect on the direction of Inter Delta i.e., Inter Delta and Jakarta Setiabudi go up and down completely randomly.

Pair Corralation between Inter Delta and Jakarta Setiabudi

Assuming the 90 days trading horizon Inter Delta Tbk is expected to under-perform the Jakarta Setiabudi. But the stock apears to be less risky and, when comparing its historical volatility, Inter Delta Tbk is 2.47 times less risky than Jakarta Setiabudi. The stock trades about -0.03 of its potential returns per unit of risk. The Jakarta Setiabudi Internasional is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  972,500  in Jakarta Setiabudi Internasional on December 29, 2024 and sell it today you would lose (267,500) from holding Jakarta Setiabudi Internasional or give up 27.51% of portfolio value over 90 days.

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

Inter Delta Tbk  vs.  Jakarta Setiabudi Internasiona

Inter Delta Tbk

Risk-Adjusted Performance

Very Weak

Over the last 90 days Inter Delta 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.

Jakarta Setiabudi

Risk-Adjusted Performance

Very Weak

Over the last 90 days Jakarta Setiabudi Internasional has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent forward-looking signals, Jakarta Setiabudi 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 Inter Delta and Jakarta Setiabudi

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

The idea behind Inter Delta Tbk and Jakarta Setiabudi Internasional 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.