Correlation Between Jasnita Telekomindo and Sumber Tani

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

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

Diversification Opportunities for Jasnita Telekomindo and Sumber Tani

-0.29

Correlation Coefficient

Jasnita Telekomindo  Sumber Tani

Very good diversification

The 3 months correlation between Jasnita and Sumber is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Jasnita Telekomindo Tbk and Sumber Tani Agung in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sumber Tani Agung and Jasnita Telekomindo 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 Jasnita Telekomindo Tbk are associated (or correlated) with Sumber Tani. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sumber Tani Agung has no effect on the direction of Jasnita Telekomindo i.e., Jasnita Telekomindo and Sumber Tani go up and down completely randomly.

Pair Corralation between Jasnita Telekomindo and Sumber Tani

Assuming the 90 days trading horizon Jasnita Telekomindo Tbk is expected to generate 7.21 times more return on investment than Sumber Tani. However, Jasnita Telekomindo is 7.21 times more volatile than Sumber Tani Agung. It trades about 0.18 of its potential returns per unit of risk. Sumber Tani Agung is currently generating about -0.1 per unit of risk. If you would invest  5,300  in Jasnita Telekomindo Tbk on October 10, 2024 and sell it today you would earn a total of  1,400  from holding Jasnita Telekomindo Tbk or generate 26.42% return on investment over 90 days.

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

Jasnita Telekomindo Tbk  vs.  Sumber Tani Agung

Jasnita Telekomindo Tbk

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Jasnita Telekomindo Tbk are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Jasnita Telekomindo disclosed solid returns over the last few months and may actually be approaching a breakup point.

Sumber Tani Agung

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sumber Tani Agung has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent forward-looking signals, Sumber Tani 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 Jasnita Telekomindo and Sumber Tani

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

The idea behind Jasnita Telekomindo Tbk and Sumber Tani Agung 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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.