Correlation Between Hanjaya Mandala and Bank Jabar

Can any of the company-specific risk be diversified away by investing in both Hanjaya Mandala and Bank Jabar 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 Hanjaya Mandala and Bank Jabar into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Hanjaya Mandala Sampoerna and Bank Jabar, you can compare the effects of market volatilities on Hanjaya Mandala and Bank Jabar 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 Hanjaya Mandala with a short position of Bank Jabar. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hanjaya Mandala and Bank Jabar.

Diversification Opportunities for Hanjaya Mandala and Bank Jabar

0.72

Correlation Coefficient

Hanjaya Mandala  Bank Jabar

Poor diversification

The 3 months correlation between Hanjaya and Bank is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Hanjaya Mandala Sampoerna and Bank Jabar in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bank Jabar and Hanjaya Mandala 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 Hanjaya Mandala Sampoerna are associated (or correlated) with Bank Jabar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bank Jabar has no effect on the direction of Hanjaya Mandala i.e., Hanjaya Mandala and Bank Jabar go up and down completely randomly.

Pair Corralation between Hanjaya Mandala and Bank Jabar

Assuming the 90 days trading horizon Hanjaya Mandala Sampoerna is expected to under-perform the Bank Jabar. In addition to that, Hanjaya Mandala is 3.46 times more volatile than Bank Jabar. It trades about -0.07 of its total potential returns per unit of risk. Bank Jabar is currently generating about -0.11 per unit of volatility. If you would invest  99,500  in Bank Jabar on September 13, 2024 and sell it today you would lose (4,500) from holding Bank Jabar or give up 4.52% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.41%
Values	Daily Returns

Hanjaya Mandala Sampoerna  vs.  Bank Jabar

Hanjaya Mandala Sampoerna

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hanjaya Mandala Sampoerna 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.

Bank Jabar

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bank Jabar has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent forward-looking signals, Bank Jabar 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 Hanjaya Mandala and Bank Jabar

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

The idea behind Hanjaya Mandala Sampoerna and Bank Jabar 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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.