Correlation Between Jakarta Setiabudi and Inter Delta

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

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

Diversification Opportunities for Jakarta Setiabudi and Inter Delta

0.21

Correlation Coefficient

Jakarta Setiabudi  Inter Delta

Modest diversification

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

Pair Corralation between Jakarta Setiabudi and Inter Delta

Assuming the 90 days trading horizon Jakarta Setiabudi Internasional is expected to generate 2.47 times more return on investment than Inter Delta. However, Jakarta Setiabudi is 2.47 times more volatile than Inter Delta Tbk. It trades about 0.01 of its potential returns per unit of risk. Inter Delta Tbk is currently generating about -0.03 per unit of risk. 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

Jakarta Setiabudi Internasiona  vs.  Inter Delta Tbk

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.

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 weak 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.

Pair Trading with Jakarta Setiabudi and Inter Delta

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

The idea behind Jakarta Setiabudi Internasional and Inter Delta 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.