Correlation Between Tunas Baru and Ultra Jaya

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

By analyzing existing cross correlation between Tunas Baru Lampung and Ultra Jaya Milk, you can compare the effects of market volatilities on Tunas Baru and Ultra 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 Tunas Baru with a short position of Ultra Jaya. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tunas Baru and Ultra Jaya.

Diversification Opportunities for Tunas Baru and Ultra Jaya

0.0

Correlation Coefficient

Tunas Baru  Ultra Jaya

Pay attention - limited upside

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

Pair Corralation between Tunas Baru and Ultra Jaya

If you would invest (100.00) in Ultra Jaya Milk on October 9, 2024 and sell it today you would earn a total of  100.00  from holding Ultra Jaya Milk or generate -100.0% return on investment over 90 days.

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

Tunas Baru Lampung  vs.  Ultra Jaya Milk

Tunas Baru Lampung

Risk-Adjusted Performance

0 of 100

Very Weak

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

Ultra Jaya Milk

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Tunas Baru and Ultra Jaya

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

The idea behind Tunas Baru Lampung and Ultra Jaya Milk 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.

Check out your portfolio center.

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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.