Correlation Between Semen Indonesia and J Resources

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

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

Diversification Opportunities for Semen Indonesia and J Resources

-0.33

Correlation Coefficient

Semen Indonesia  J Resources

Very good diversification

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

Pair Corralation between Semen Indonesia and J Resources

Assuming the 90 days trading horizon Semen Indonesia Persero is expected to under-perform the J Resources. But the stock apears to be less risky and, when comparing its historical volatility, Semen Indonesia Persero is 1.67 times less risky than J Resources. The stock trades about -0.08 of its potential returns per unit of risk. The J Resources Asia is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  23,400  in J Resources Asia on December 29, 2024 and sell it today you would earn a total of  2,000  from holding J Resources Asia or generate 8.55% return on investment over 90 days.

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

Semen Indonesia Persero  vs.  J Resources Asia

Semen Indonesia Persero

Risk-Adjusted Performance

Very Weak

Over the last 90 days Semen Indonesia Persero 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 April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

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.

Pair Trading with Semen Indonesia and J Resources

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

The idea behind Semen Indonesia Persero and J Resources Asia 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.