Correlation Between Kawasan Industri and Jaya Real

Can any of the company-specific risk be diversified away by investing in both Kawasan Industri and Jaya Real 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 Jaya Real 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 Jaya Real Property, you can compare the effects of market volatilities on Kawasan Industri and Jaya Real 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 Jaya Real. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kawasan Industri and Jaya Real.

Diversification Opportunities for Kawasan Industri and Jaya Real

-0.27

Correlation Coefficient

Kawasan Industri  Jaya Real

Very good diversification

The 3 months correlation between Kawasan and Jaya is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Kawasan Industri Jababeka and Jaya Real Property in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jaya Real Property 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 Jaya Real. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jaya Real Property has no effect on the direction of Kawasan Industri i.e., Kawasan Industri and Jaya Real go up and down completely randomly.

Pair Corralation between Kawasan Industri and Jaya Real

Assuming the 90 days trading horizon Kawasan Industri Jababeka is expected to under-perform the Jaya Real. In addition to that, Kawasan Industri is 1.57 times more volatile than Jaya Real Property. It trades about -0.05 of its total potential returns per unit of risk. Jaya Real Property is currently generating about -0.02 per unit of volatility. If you would invest  74,000  in Jaya Real Property on December 30, 2024 and sell it today you would lose (1,000.00) from holding Jaya Real Property or give up 1.35% of portfolio value over 90 days.

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

Kawasan Industri Jababeka  vs.  Jaya Real Property

Kawasan Industri Jababeka

Risk-Adjusted Performance

Very Weak

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

Jaya Real Property

Risk-Adjusted Performance

Very Weak

Over the last 90 days Jaya Real Property has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent forward-looking signals, Jaya Real 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 Kawasan Industri and Jaya Real

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

The idea behind Kawasan Industri Jababeka and Jaya Real Property 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.