Correlation Between Jakarta Int and Chitose Internasional

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

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

Diversification Opportunities for Jakarta Int and Chitose Internasional

-0.23

Correlation Coefficient

Jakarta Int  Chitose Internasional

Very good diversification

The 3 months correlation between Jakarta and Chitose is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Jakarta Int Hotels and Chitose Internasional Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chitose Internasional Tbk and Jakarta Int 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 Jakarta Int Hotels are associated (or correlated) with Chitose Internasional. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chitose Internasional Tbk has no effect on the direction of Jakarta Int i.e., Jakarta Int and Chitose Internasional go up and down completely randomly.

Pair Corralation between Jakarta Int and Chitose Internasional

Assuming the 90 days trading horizon Jakarta Int Hotels is expected to under-perform the Chitose Internasional. In addition to that, Jakarta Int is 1.39 times more volatile than Chitose Internasional Tbk. It trades about -0.12 of its total potential returns per unit of risk. Chitose Internasional Tbk is currently generating about 0.09 per unit of volatility. If you would invest  17,000  in Chitose Internasional Tbk on September 27, 2024 and sell it today you would earn a total of  1,600  from holding Chitose Internasional Tbk or generate 9.41% return on investment over 90 days.

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

Jakarta Int Hotels  vs.  Chitose Internasional Tbk

Jakarta Int Hotels

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Jakarta Int Hotels are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Jakarta Int disclosed solid returns over the last few months and may actually be approaching a breakup point.

Chitose Internasional Tbk

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Chitose Internasional Tbk are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Chitose Internasional may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Jakarta Int and Chitose Internasional

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

The idea behind Jakarta Int Hotels and Chitose Internasional Tbk 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.