Correlation Between Jakarta Setiabudi and Victoria Care

Can any of the company-specific risk be diversified away by investing in both Jakarta Setiabudi and Victoria Care 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 Victoria Care 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 Victoria Care Indonesia, you can compare the effects of market volatilities on Jakarta Setiabudi and Victoria Care 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 Victoria Care. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jakarta Setiabudi and Victoria Care.

Diversification Opportunities for Jakarta Setiabudi and Victoria Care

-0.55

Correlation Coefficient

Jakarta Setiabudi  Victoria Care

Excellent diversification

The 3 months correlation between Jakarta and Victoria is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Jakarta Setiabudi Internasiona and Victoria Care Indonesia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Victoria Care Indonesia 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 Victoria Care. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Victoria Care Indonesia has no effect on the direction of Jakarta Setiabudi i.e., Jakarta Setiabudi and Victoria Care go up and down completely randomly.

Pair Corralation between Jakarta Setiabudi and Victoria Care

Assuming the 90 days trading horizon Jakarta Setiabudi Internasional is expected to generate 7.97 times more return on investment than Victoria Care. However, Jakarta Setiabudi is 7.97 times more volatile than Victoria Care Indonesia. It trades about 0.17 of its potential returns per unit of risk. Victoria Care Indonesia is currently generating about 0.0 per unit of risk. If you would invest  89,931  in Jakarta Setiabudi Internasional on October 3, 2024 and sell it today you would earn a total of  882,569  from holding Jakarta Setiabudi Internasional or generate 981.38% return on investment over 90 days.

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

Jakarta Setiabudi Internasiona  vs.  Victoria Care Indonesia

Jakarta Setiabudi

Risk-Adjusted Performance

22 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Jakarta Setiabudi Internasional are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Jakarta Setiabudi disclosed solid returns over the last few months and may actually be approaching a breakup point.

Victoria Care Indonesia

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Victoria Care Indonesia are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent forward-looking signals, Victoria Care 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 Jakarta Setiabudi and Victoria Care

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

The idea behind Jakarta Setiabudi Internasional and Victoria Care Indonesia 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.