Correlation Between Kawasan Industri and Global Mediacom

Can any of the company-specific risk be diversified away by investing in both Kawasan Industri and Global Mediacom 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 Kawasan Industri and Global Mediacom into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Kawasan Industri Jababeka and Global Mediacom Tbk, you can compare the effects of market volatilities on Kawasan Industri and Global Mediacom 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 Kawasan Industri with a short position of Global Mediacom. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kawasan Industri and Global Mediacom.

Diversification Opportunities for Kawasan Industri and Global Mediacom

-0.5

Correlation Coefficient

Kawasan Industri  Global Mediacom

Very good diversification

The 3 months correlation between Kawasan and Global is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Kawasan Industri Jababeka and Global Mediacom Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Mediacom Tbk and Kawasan Industri 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 Kawasan Industri Jababeka are associated (or correlated) with Global Mediacom. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Mediacom Tbk has no effect on the direction of Kawasan Industri i.e., Kawasan Industri and Global Mediacom go up and down completely randomly.

Pair Corralation between Kawasan Industri and Global Mediacom

Assuming the 90 days trading horizon Kawasan Industri Jababeka is expected to generate 1.04 times more return on investment than Global Mediacom. However, Kawasan Industri is 1.04 times more volatile than Global Mediacom Tbk. It trades about 0.19 of its potential returns per unit of risk. Global Mediacom Tbk is currently generating about -0.2 per unit of risk. If you would invest  16,600  in Kawasan Industri Jababeka on September 5, 2024 and sell it today you would earn a total of  2,900  from holding Kawasan Industri Jababeka or generate 17.47% return on investment over 90 days.

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

Kawasan Industri Jababeka  vs.  Global Mediacom Tbk

Kawasan Industri Jababeka

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Kawasan Industri Jababeka are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Kawasan Industri disclosed solid returns over the last few months and may actually be approaching a breakup point.

Global Mediacom Tbk

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Global Mediacom Tbk has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's forward-looking signals remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Kawasan Industri and Global Mediacom

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

The idea behind Kawasan Industri Jababeka and Global Mediacom 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.