Correlation Between Indosterling Technomedia and Jakarta Setiabudi

Can any of the company-specific risk be diversified away by investing in both Indosterling Technomedia and Jakarta Setiabudi 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 Indosterling Technomedia and Jakarta Setiabudi into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Indosterling Technomedia Tbk and Jakarta Setiabudi Internasional, you can compare the effects of market volatilities on Indosterling Technomedia and Jakarta Setiabudi 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 Indosterling Technomedia with a short position of Jakarta Setiabudi. Check out your portfolio center. Please also check ongoing floating volatility patterns of Indosterling Technomedia and Jakarta Setiabudi.

Diversification Opportunities for Indosterling Technomedia and Jakarta Setiabudi

0.0

Correlation Coefficient

Indosterling Technomedia  Jakarta Setiabudi

Pay attention - limited upside

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

Pair Corralation between Indosterling Technomedia and Jakarta Setiabudi

If you would invest  180,500  in Jakarta Setiabudi Internasional on September 5, 2024 and sell it today you would earn a total of  764,500  from holding Jakarta Setiabudi Internasional or generate 423.55% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	98.41%
Values	Daily Returns

Indosterling Technomedia Tbk  vs.  Jakarta Setiabudi Internasiona

Indosterling Technomedia

Risk-Adjusted Performance

0 of 100

Very Weak

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

Jakarta Setiabudi

Risk-Adjusted Performance

23 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Jakarta Setiabudi Internasional are ranked lower than 23 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Jakarta Setiabudi disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Indosterling Technomedia and Jakarta Setiabudi

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

The idea behind Indosterling Technomedia Tbk and Jakarta Setiabudi Internasional 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.