Correlation Between Jaya Swarasa and Indo Pureco

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

By analyzing existing cross correlation between Jaya Swarasa Agung and Indo Pureco Pratama, you can compare the effects of market volatilities on Jaya Swarasa and Indo Pureco 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 Swarasa with a short position of Indo Pureco. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jaya Swarasa and Indo Pureco.

Diversification Opportunities for Jaya Swarasa and Indo Pureco

0.0

Correlation Coefficient

Jaya Swarasa  Indo Pureco

Pay attention - limited upside

The 3 months correlation between Jaya and Indo is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Jaya Swarasa Agung and Indo Pureco Pratama in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Indo Pureco Pratama and Jaya Swarasa 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 Swarasa Agung are associated (or correlated) with Indo Pureco. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Indo Pureco Pratama has no effect on the direction of Jaya Swarasa i.e., Jaya Swarasa and Indo Pureco go up and down completely randomly.

Pair Corralation between Jaya Swarasa and Indo Pureco

Assuming the 90 days trading horizon Jaya Swarasa Agung is expected to under-perform the Indo Pureco. In addition to that, Jaya Swarasa is 1.22 times more volatile than Indo Pureco Pratama. It trades about -0.08 of its total potential returns per unit of risk. Indo Pureco Pratama is currently generating about -0.07 per unit of volatility. If you would invest  7,900  in Indo Pureco Pratama on October 11, 2024 and sell it today you would lose (6,500) from holding Indo Pureco Pratama or give up 82.28% of portfolio value over 90 days.

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

Jaya Swarasa Agung  vs.  Indo Pureco Pratama

Jaya Swarasa Agung

Risk-Adjusted Performance

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Very Weak

Over the last 90 days Jaya Swarasa Agung 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 February 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Indo Pureco Pratama

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Jaya Swarasa and Indo Pureco

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

The idea behind Jaya Swarasa Agung and Indo Pureco Pratama 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.