Correlation Between Putra Rajawali and Jasnita Telekomindo

Can any of the company-specific risk be diversified away by investing in both Putra Rajawali and Jasnita Telekomindo 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 Putra Rajawali and Jasnita Telekomindo into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Putra Rajawali Kencana and Jasnita Telekomindo Tbk, you can compare the effects of market volatilities on Putra Rajawali and Jasnita Telekomindo 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 Putra Rajawali with a short position of Jasnita Telekomindo. Check out your portfolio center. Please also check ongoing floating volatility patterns of Putra Rajawali and Jasnita Telekomindo.

Diversification Opportunities for Putra Rajawali and Jasnita Telekomindo

-0.15

Correlation Coefficient

Putra Rajawali  Jasnita Telekomindo

Good diversification

The 3 months correlation between Putra and Jasnita is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Putra Rajawali Kencana and Jasnita Telekomindo Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jasnita Telekomindo Tbk and Putra Rajawali 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 Putra Rajawali Kencana are associated (or correlated) with Jasnita Telekomindo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jasnita Telekomindo Tbk has no effect on the direction of Putra Rajawali i.e., Putra Rajawali and Jasnita Telekomindo go up and down completely randomly.

Pair Corralation between Putra Rajawali and Jasnita Telekomindo

Assuming the 90 days trading horizon Putra Rajawali Kencana is expected to under-perform the Jasnita Telekomindo. In addition to that, Putra Rajawali is 1.25 times more volatile than Jasnita Telekomindo Tbk. It trades about -0.04 of its total potential returns per unit of risk. Jasnita Telekomindo Tbk is currently generating about 0.0 per unit of volatility. If you would invest  8,100  in Jasnita Telekomindo Tbk on October 11, 2024 and sell it today you would lose (1,400) from holding Jasnita Telekomindo Tbk or give up 17.28% of portfolio value over 90 days.

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

Putra Rajawali Kencana  vs.  Jasnita Telekomindo Tbk

Putra Rajawali Kencana

Risk-Adjusted Performance

0 of 100

Very Weak

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

Jasnita Telekomindo Tbk

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Jasnita Telekomindo Tbk are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Jasnita Telekomindo disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Putra Rajawali and Jasnita Telekomindo

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

The idea behind Putra Rajawali Kencana and Jasnita Telekomindo Tbk 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.