Correlation Between Pembangunan Jaya and Multistrada Arah

Can any of the company-specific risk be diversified away by investing in both Pembangunan Jaya and Multistrada Arah 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 Pembangunan Jaya and Multistrada Arah into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Pembangunan Jaya Ancol and Multistrada Arah Sarana, you can compare the effects of market volatilities on Pembangunan Jaya and Multistrada Arah 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 Pembangunan Jaya with a short position of Multistrada Arah. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pembangunan Jaya and Multistrada Arah.

Diversification Opportunities for Pembangunan Jaya and Multistrada Arah

0.0

Correlation Coefficient

Pembangunan Jaya  Multistrada Arah

Pay attention - limited upside

The 3 months correlation between Pembangunan and Multistrada is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Pembangunan Jaya Ancol and Multistrada Arah Sarana in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Multistrada Arah Sarana and Pembangunan Jaya 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 Pembangunan Jaya Ancol are associated (or correlated) with Multistrada Arah. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Multistrada Arah Sarana has no effect on the direction of Pembangunan Jaya i.e., Pembangunan Jaya and Multistrada Arah go up and down completely randomly.

Pair Corralation between Pembangunan Jaya and Multistrada Arah

Assuming the 90 days trading horizon Pembangunan Jaya Ancol is expected to under-perform the Multistrada Arah. But the stock apears to be less risky and, when comparing its historical volatility, Pembangunan Jaya Ancol is 2.03 times less risky than Multistrada Arah. The stock trades about 0.0 of its potential returns per unit of risk. The Multistrada Arah Sarana is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  216,669  in Multistrada Arah Sarana on September 13, 2024 and sell it today you would earn a total of  403,331  from holding Multistrada Arah Sarana or generate 186.15% return on investment over 90 days.

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

Pembangunan Jaya Ancol  vs.  Multistrada Arah Sarana

Pembangunan Jaya Ancol

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Pembangunan Jaya Ancol has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's forward-looking signals remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Multistrada Arah Sarana

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Multistrada Arah Sarana has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent forward-looking signals, Multistrada Arah 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 Pembangunan Jaya and Multistrada Arah

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

The idea behind Pembangunan Jaya Ancol and Multistrada Arah Sarana 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.