Correlation Between Tempo Inti and Jakarta Setiabudi

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

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

Diversification Opportunities for Tempo Inti and Jakarta Setiabudi

-0.18

Correlation Coefficient

Tempo Inti  Jakarta Setiabudi

Good diversification

The 3 months correlation between Tempo and Jakarta is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Tempo Inti Media and Jakarta Setiabudi Internasiona in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jakarta Setiabudi and Tempo Inti 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 Tempo Inti Media 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 Tempo Inti i.e., Tempo Inti and Jakarta Setiabudi go up and down completely randomly.

Pair Corralation between Tempo Inti and Jakarta Setiabudi

Assuming the 90 days trading horizon Tempo Inti Media is expected to generate 0.44 times more return on investment than Jakarta Setiabudi. However, Tempo Inti Media is 2.28 times less risky than Jakarta Setiabudi. It trades about -0.33 of its potential returns per unit of risk. Jakarta Setiabudi Internasional is currently generating about -0.22 per unit of risk. If you would invest  17,500  in Tempo Inti Media on October 15, 2024 and sell it today you would lose (3,300) from holding Tempo Inti Media or give up 18.86% of portfolio value over 90 days.

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

Tempo Inti Media  vs.  Jakarta Setiabudi Internasiona

Tempo Inti Media

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Tempo Inti Media 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.

Jakarta Setiabudi

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Jakarta Setiabudi Internasional are ranked lower than 11 (%) 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 Tempo Inti and Jakarta Setiabudi

The main advantage of trading using opposite Tempo Inti and Jakarta Setiabudi positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tempo Inti 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 Tempo Inti Media 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.

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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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.