Correlation Between Japfa Comfeed and Surya Citra

Can any of the company-specific risk be diversified away by investing in both Japfa Comfeed and Surya Citra 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 Japfa Comfeed and Surya Citra into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Japfa Comfeed Indonesia and Surya Citra Media, you can compare the effects of market volatilities on Japfa Comfeed and Surya Citra 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 Japfa Comfeed with a short position of Surya Citra. Check out your portfolio center. Please also check ongoing floating volatility patterns of Japfa Comfeed and Surya Citra.

Diversification Opportunities for Japfa Comfeed and Surya Citra

0.71

Correlation Coefficient

Japfa Comfeed  Surya Citra

Poor diversification

The 3 months correlation between Japfa and Surya is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Japfa Comfeed Indonesia and Surya Citra Media in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Surya Citra Media and Japfa Comfeed 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 Japfa Comfeed Indonesia are associated (or correlated) with Surya Citra. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Surya Citra Media has no effect on the direction of Japfa Comfeed i.e., Japfa Comfeed and Surya Citra go up and down completely randomly.

Pair Corralation between Japfa Comfeed and Surya Citra

Assuming the 90 days trading horizon Japfa Comfeed Indonesia is expected to generate 0.84 times more return on investment than Surya Citra. However, Japfa Comfeed Indonesia is 1.2 times less risky than Surya Citra. It trades about 0.11 of its potential returns per unit of risk. Surya Citra Media is currently generating about 0.05 per unit of risk. If you would invest  140,111  in Japfa Comfeed Indonesia on September 29, 2024 and sell it today you would earn a total of  46,889  from holding Japfa Comfeed Indonesia or generate 33.47% return on investment over 90 days.

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

Japfa Comfeed Indonesia  vs.  Surya Citra Media

Japfa Comfeed Indonesia

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Japfa Comfeed Indonesia are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Japfa Comfeed disclosed solid returns over the last few months and may actually be approaching a breakup point.

Surya Citra Media

Risk-Adjusted Performance

10 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Surya Citra Media are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Surya Citra disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Japfa Comfeed and Surya Citra

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

The idea behind Japfa Comfeed Indonesia and Surya Citra Media 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.