Correlation Between Indika Energy and Jaya Sukses

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

By analyzing existing cross correlation between Indika Energy Tbk and Jaya Sukses Makmur, you can compare the effects of market volatilities on Indika Energy and Jaya Sukses 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 Indika Energy with a short position of Jaya Sukses. Check out your portfolio center. Please also check ongoing floating volatility patterns of Indika Energy and Jaya Sukses.

Diversification Opportunities for Indika Energy and Jaya Sukses

-0.61

Correlation Coefficient

Indika Energy  Jaya Sukses

Excellent diversification

The 3 months correlation between Indika and Jaya is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Indika Energy Tbk and Jaya Sukses Makmur in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jaya Sukses Makmur and Indika Energy 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 Indika Energy Tbk are associated (or correlated) with Jaya Sukses. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jaya Sukses Makmur has no effect on the direction of Indika Energy i.e., Indika Energy and Jaya Sukses go up and down completely randomly.

Pair Corralation between Indika Energy and Jaya Sukses

Assuming the 90 days trading horizon Indika Energy Tbk is expected to under-perform the Jaya Sukses. In addition to that, Indika Energy is 3.74 times more volatile than Jaya Sukses Makmur. It trades about -0.02 of its total potential returns per unit of risk. Jaya Sukses Makmur is currently generating about 0.01 per unit of volatility. If you would invest  100,500  in Jaya Sukses Makmur on September 26, 2024 and sell it today you would earn a total of  1,000.00  from holding Jaya Sukses Makmur or generate 1.0% return on investment over 90 days.

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

Indika Energy Tbk  vs.  Jaya Sukses Makmur

Indika Energy Tbk

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Indika Energy Tbk 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 January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Jaya Sukses Makmur

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Jaya Sukses Makmur are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent forward-looking signals, Jaya Sukses 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 Indika Energy and Jaya Sukses

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

The idea behind Indika Energy Tbk and Jaya Sukses Makmur 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.