Correlation Between Panorama Sentrawisata and Jakarta Setiabudi

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

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

Diversification Opportunities for Panorama Sentrawisata and Jakarta Setiabudi

0.86

Correlation Coefficient

Panorama Sentrawisata  Jakarta Setiabudi

Very poor diversification

The 3 months correlation between Panorama and Jakarta is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Panorama Sentrawisata Tbk and Jakarta Setiabudi Internasiona in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jakarta Setiabudi and Panorama Sentrawisata 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 Panorama Sentrawisata Tbk are associated (or correlated) with Jakarta Setiabudi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jakarta Setiabudi has no effect on the direction of Panorama Sentrawisata i.e., Panorama Sentrawisata and Jakarta Setiabudi go up and down completely randomly.

Pair Corralation between Panorama Sentrawisata and Jakarta Setiabudi

Assuming the 90 days trading horizon Panorama Sentrawisata is expected to generate 2.16 times less return on investment than Jakarta Setiabudi. But when comparing it to its historical volatility, Panorama Sentrawisata Tbk is 4.27 times less risky than Jakarta Setiabudi. It trades about 0.46 of its potential returns per unit of risk. Jakarta Setiabudi Internasional is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest  797,500  in Jakarta Setiabudi Internasional on September 27, 2024 and sell it today you would earn a total of  282,500  from holding Jakarta Setiabudi Internasional or generate 35.42% return on investment over 90 days.

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

Panorama Sentrawisata Tbk  vs.  Jakarta Setiabudi Internasiona

Panorama Sentrawisata Tbk

Risk-Adjusted Performance

22 of 100

Solid

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

Jakarta Setiabudi

Risk-Adjusted Performance

21 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Jakarta Setiabudi Internasional are ranked lower than 21 (%) 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.

Pair Trading with Panorama Sentrawisata and Jakarta Setiabudi

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

The idea behind Panorama Sentrawisata Tbk and Jakarta Setiabudi Internasional 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.