Correlation Between J+J SNACK and PT Bank

Can any of the company-specific risk be diversified away by investing in both J+J SNACK and PT Bank 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 J+J SNACK and PT Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between JJ SNACK FOODS and PT Bank Rakyat, you can compare the effects of market volatilities on J+J SNACK and PT Bank 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 J+J SNACK with a short position of PT Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of J+J SNACK and PT Bank.

Diversification Opportunities for J+J SNACK and PT Bank

-0.69

Correlation Coefficient

J+J SNACK  PT Bank

Excellent diversification

The 3 months correlation between J+J and BYRA is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding JJ SNACK FOODS and PT Bank Rakyat in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PT Bank Rakyat and J+J SNACK 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 JJ SNACK FOODS are associated (or correlated) with PT Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PT Bank Rakyat has no effect on the direction of J+J SNACK i.e., J+J SNACK and PT Bank go up and down completely randomly.

Pair Corralation between J+J SNACK and PT Bank

Assuming the 90 days trading horizon JJ SNACK FOODS is expected to generate 0.2 times more return on investment than PT Bank. However, JJ SNACK FOODS is 4.91 times less risky than PT Bank. It trades about 0.18 of its potential returns per unit of risk. PT Bank Rakyat is currently generating about 0.01 per unit of risk. If you would invest  14,624  in JJ SNACK FOODS on September 12, 2024 and sell it today you would earn a total of  1,576  from holding JJ SNACK FOODS or generate 10.78% return on investment over 90 days.

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

JJ SNACK FOODS  vs.  PT Bank Rakyat

JJ SNACK FOODS

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in JJ SNACK FOODS are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, J+J SNACK may actually be approaching a critical reversion point that can send shares even higher in January 2025.

PT Bank Rakyat

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PT Bank Rakyat has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, PT Bank is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with J+J SNACK and PT Bank

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

The idea behind JJ SNACK FOODS and PT Bank Rakyat 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.

Check out your portfolio center.

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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.