Correlation Between Jakarta Int and Itama Ranoraya

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Can any of the company-specific risk be diversified away by investing in both Jakarta Int and Itama Ranoraya 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 Jakarta Int and Itama Ranoraya into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Jakarta Int Hotels and Itama Ranoraya, you can compare the effects of market volatilities on Jakarta Int and Itama Ranoraya 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 Jakarta Int with a short position of Itama Ranoraya. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jakarta Int and Itama Ranoraya.

Diversification Opportunities for Jakarta Int and Itama Ranoraya

-0.91
  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between Jakarta and Itama is -0.91. Overlapping area represents the amount of risk that can be diversified away by holding Jakarta Int Hotels and Itama Ranoraya in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Itama Ranoraya and Jakarta Int 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 Jakarta Int Hotels are associated (or correlated) with Itama Ranoraya. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Itama Ranoraya has no effect on the direction of Jakarta Int i.e., Jakarta Int and Itama Ranoraya go up and down completely randomly.

Pair Corralation between Jakarta Int and Itama Ranoraya

Assuming the 90 days trading horizon Jakarta Int Hotels is expected to generate 9.02 times more return on investment than Itama Ranoraya. However, Jakarta Int is 9.02 times more volatile than Itama Ranoraya. It trades about 0.3 of its potential returns per unit of risk. Itama Ranoraya is currently generating about -0.22 per unit of risk. If you would invest  36,000  in Jakarta Int Hotels on September 17, 2024 and sell it today you would earn a total of  143,500  from holding Jakarta Int Hotels or generate 398.61% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Jakarta Int Hotels  vs.  Itama Ranoraya

 Performance 
       Timeline  
Jakarta Int Hotels 

Risk-Adjusted Performance

23 of 100

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

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Itama Ranoraya 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.

Jakarta Int and Itama Ranoraya Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Jakarta Int and Itama Ranoraya

The main advantage of trading using opposite Jakarta Int and Itama Ranoraya positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Jakarta Int position performs unexpectedly, Itama Ranoraya 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 Itama Ranoraya will offset losses from the drop in Itama Ranoraya's long position.
The idea behind Jakarta Int Hotels and Itama Ranoraya 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.

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