Correlation Between Jaya Sukses and Metropolitan Kentjana

Can any of the company-specific risk be diversified away by investing in both Jaya Sukses and Metropolitan Kentjana 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 Metropolitan Kentjana 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 Metropolitan Kentjana Tbk, you can compare the effects of market volatilities on Jaya Sukses and Metropolitan Kentjana 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 Metropolitan Kentjana. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jaya Sukses and Metropolitan Kentjana.

Diversification Opportunities for Jaya Sukses and Metropolitan Kentjana

-0.55

Correlation Coefficient

Jaya Sukses  Metropolitan Kentjana

Excellent diversification

The 3 months correlation between Jaya and Metropolitan is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Jaya Sukses Makmur and Metropolitan Kentjana Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Metropolitan Kentjana Tbk 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 Metropolitan Kentjana. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Metropolitan Kentjana Tbk has no effect on the direction of Jaya Sukses i.e., Jaya Sukses and Metropolitan Kentjana go up and down completely randomly.

Pair Corralation between Jaya Sukses and Metropolitan Kentjana

Assuming the 90 days trading horizon Jaya Sukses Makmur is expected to generate 0.3 times more return on investment than Metropolitan Kentjana. However, Jaya Sukses Makmur is 3.37 times less risky than Metropolitan Kentjana. It trades about 0.31 of its potential returns per unit of risk. Metropolitan Kentjana Tbk is currently generating about -0.11 per unit of risk. If you would invest  99,000  in Jaya Sukses Makmur on September 11, 2024 and sell it today you would earn a total of  6,000  from holding Jaya Sukses Makmur or generate 6.06% return on investment over 90 days.

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

Jaya Sukses Makmur  vs.  Metropolitan Kentjana Tbk

Jaya Sukses Makmur

Risk-Adjusted Performance

24 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Jaya Sukses Makmur are ranked lower than 24 (%) 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.

Metropolitan Kentjana Tbk

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Metropolitan Kentjana Tbk 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.

Pair Trading with Jaya Sukses and Metropolitan Kentjana

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

The idea behind Jaya Sukses Makmur and Metropolitan Kentjana 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.