Correlation Between Kedaung Indah and J Resources

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

By analyzing existing cross correlation between Kedaung Indah Can and J Resources Asia, you can compare the effects of market volatilities on Kedaung Indah and J Resources 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 Kedaung Indah with a short position of J Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kedaung Indah and J Resources.

Diversification Opportunities for Kedaung Indah and J Resources

-0.4

Correlation Coefficient

Kedaung Indah  J Resources

Very good diversification

The 3 months correlation between Kedaung and PSAB is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Kedaung Indah Can and J Resources Asia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on J Resources Asia and Kedaung Indah 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 Kedaung Indah Can are associated (or correlated) with J Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of J Resources Asia has no effect on the direction of Kedaung Indah i.e., Kedaung Indah and J Resources go up and down completely randomly.

Pair Corralation between Kedaung Indah and J Resources

Assuming the 90 days trading horizon Kedaung Indah Can is expected to under-perform the J Resources. But the stock apears to be less risky and, when comparing its historical volatility, Kedaung Indah Can is 1.05 times less risky than J Resources. The stock trades about -0.02 of its potential returns per unit of risk. The J Resources Asia is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  22,600  in J Resources Asia on December 27, 2024 and sell it today you would earn a total of  2,800  from holding J Resources Asia or generate 12.39% return on investment over 90 days.

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

Kedaung Indah Can  vs.  J Resources Asia

Kedaung Indah Can

Risk-Adjusted Performance

Very Weak

Over the last 90 days Kedaung Indah Can has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent forward-looking signals, Kedaung Indah is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

J Resources Asia

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in J Resources Asia are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite quite weak forward-looking signals, J Resources disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Kedaung Indah and J Resources

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

The idea behind Kedaung Indah Can and J Resources Asia 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.