Correlation Between Jaya Sukses and PT Indonesia

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

By analyzing existing cross correlation between Jaya Sukses Makmur and PT Indonesia Kendaraan, you can compare the effects of market volatilities on Jaya Sukses and PT Indonesia 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 Jaya Sukses with a short position of PT Indonesia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jaya Sukses and PT Indonesia.

Diversification Opportunities for Jaya Sukses and PT Indonesia

0.33

Correlation Coefficient

Jaya Sukses  PT Indonesia

Weak diversification

The 3 months correlation between Jaya and IPCC is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Jaya Sukses Makmur and PT Indonesia Kendaraan in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PT Indonesia Kendaraan and Jaya Sukses 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 Jaya Sukses Makmur are associated (or correlated) with PT Indonesia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PT Indonesia Kendaraan has no effect on the direction of Jaya Sukses i.e., Jaya Sukses and PT Indonesia go up and down completely randomly.

Pair Corralation between Jaya Sukses and PT Indonesia

Assuming the 90 days trading horizon Jaya Sukses is expected to generate 9.41 times less return on investment than PT Indonesia. But when comparing it to its historical volatility, Jaya Sukses Makmur is 2.36 times less risky than PT Indonesia. It trades about 0.02 of its potential returns per unit of risk. PT Indonesia Kendaraan is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  46,164  in PT Indonesia Kendaraan on October 21, 2024 and sell it today you would earn a total of  26,836  from holding PT Indonesia Kendaraan or generate 58.13% return on investment over 90 days.

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

Jaya Sukses Makmur  vs.  PT Indonesia Kendaraan

Jaya Sukses Makmur

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Jaya Sukses Makmur are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent forward-looking signals, Jaya Sukses is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

PT Indonesia Kendaraan

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in PT Indonesia Kendaraan are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, PT Indonesia may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Jaya Sukses and PT Indonesia

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

The idea behind Jaya Sukses Makmur and PT Indonesia Kendaraan 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.