Correlation Between Sona Topas and Pembangunan Jaya

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

By analyzing existing cross correlation between Sona Topas Tourism and Pembangunan Jaya Ancol, you can compare the effects of market volatilities on Sona Topas and Pembangunan Jaya 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 Sona Topas with a short position of Pembangunan Jaya. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sona Topas and Pembangunan Jaya.

Diversification Opportunities for Sona Topas and Pembangunan Jaya

-0.76

Correlation Coefficient

Sona Topas  Pembangunan Jaya

Pay attention - limited upside

The 3 months correlation between Sona and Pembangunan is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding Sona Topas Tourism and Pembangunan Jaya Ancol in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pembangunan Jaya Ancol and Sona Topas 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 Sona Topas Tourism are associated (or correlated) with Pembangunan Jaya. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pembangunan Jaya Ancol has no effect on the direction of Sona Topas i.e., Sona Topas and Pembangunan Jaya go up and down completely randomly.

Pair Corralation between Sona Topas and Pembangunan Jaya

Assuming the 90 days trading horizon Sona Topas Tourism is expected to under-perform the Pembangunan Jaya. In addition to that, Sona Topas is 6.55 times more volatile than Pembangunan Jaya Ancol. It trades about -0.47 of its total potential returns per unit of risk. Pembangunan Jaya Ancol is currently generating about -0.51 per unit of volatility. If you would invest  63,000  in Pembangunan Jaya Ancol on September 2, 2024 and sell it today you would lose (4,000) from holding Pembangunan Jaya Ancol or give up 6.35% of portfolio value over 90 days.

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

Sona Topas Tourism  vs.  Pembangunan Jaya Ancol

Sona Topas Tourism

Risk-Adjusted Performance

22 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Sona Topas Tourism are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Sona Topas disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pembangunan Jaya Ancol

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Pembangunan Jaya Ancol 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 Sona Topas and Pembangunan Jaya

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

The idea behind Sona Topas Tourism and Pembangunan Jaya Ancol 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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.