Correlation Between J Resources and Berkah Beton

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

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

Diversification Opportunities for J Resources and Berkah Beton

-0.7

Correlation Coefficient

J Resources  Berkah Beton

Excellent diversification

The 3 months correlation between PSAB and Berkah is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding J Resources Asia and Berkah Beton Sadaya in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Berkah Beton Sadaya and J Resources 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 J Resources Asia are associated (or correlated) with Berkah Beton. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Berkah Beton Sadaya has no effect on the direction of J Resources i.e., J Resources and Berkah Beton go up and down completely randomly.

Pair Corralation between J Resources and Berkah Beton

Assuming the 90 days trading horizon J Resources Asia is expected to generate 0.6 times more return on investment than Berkah Beton. However, J Resources Asia is 1.66 times less risky than Berkah Beton. It trades about 0.1 of its potential returns per unit of risk. Berkah Beton Sadaya is currently generating about -0.06 per unit of risk. If you would invest  23,000  in J Resources Asia on September 1, 2024 and sell it today you would earn a total of  7,200  from holding J Resources Asia or generate 31.3% return on investment over 90 days.

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

J Resources Asia  vs.  Berkah Beton Sadaya

J Resources Asia

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in J Resources Asia are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, J Resources disclosed solid returns over the last few months and may actually be approaching a breakup point.

Berkah Beton Sadaya

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Berkah Beton Sadaya 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 December 2024. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with J Resources and Berkah Beton

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

The idea behind J Resources Asia and Berkah Beton Sadaya 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.

Check out your portfolio center.

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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.