Correlation Between J Resources and Dana Brata

Can any of the company-specific risk be diversified away by investing in both J Resources and Dana Brata 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 Dana Brata 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 Dana Brata Luhur, you can compare the effects of market volatilities on J Resources and Dana Brata 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 Dana Brata. Check out your portfolio center. Please also check ongoing floating volatility patterns of J Resources and Dana Brata.

Diversification Opportunities for J Resources and Dana Brata

0.2

Correlation Coefficient

J Resources  Dana Brata

Modest diversification

The 3 months correlation between PSAB and Dana is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding J Resources Asia and Dana Brata Luhur in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dana Brata Luhur 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 Dana Brata. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dana Brata Luhur has no effect on the direction of J Resources i.e., J Resources and Dana Brata go up and down completely randomly.

Pair Corralation between J Resources and Dana Brata

Assuming the 90 days trading horizon J Resources is expected to generate 1.15 times less return on investment than Dana Brata. In addition to that, J Resources is 1.17 times more volatile than Dana Brata Luhur. It trades about 0.05 of its total potential returns per unit of risk. Dana Brata Luhur is currently generating about 0.07 per unit of volatility. If you would invest  62,500  in Dana Brata Luhur on December 29, 2024 and sell it today you would earn a total of  9,000  from holding Dana Brata Luhur or generate 14.4% return on investment over 90 days.

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

J Resources Asia  vs.  Dana Brata Luhur

J Resources Asia

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in J Resources Asia are ranked lower than 3 (%) 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.

Dana Brata Luhur

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Dana Brata Luhur are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Dana Brata disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with J Resources and Dana Brata

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

The idea behind J Resources Asia and Dana Brata Luhur 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.