Correlation Between Jakarta Setiabudi and Armada Berjaya

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

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

Diversification Opportunities for Jakarta Setiabudi and Armada Berjaya

-0.68

Correlation Coefficient

Jakarta Setiabudi  Armada Berjaya

Excellent diversification

The 3 months correlation between Jakarta and Armada is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding Jakarta Setiabudi Internasiona and Armada Berjaya Trans in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Armada Berjaya Trans and Jakarta Setiabudi 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 Setiabudi Internasional are associated (or correlated) with Armada Berjaya. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Armada Berjaya Trans has no effect on the direction of Jakarta Setiabudi i.e., Jakarta Setiabudi and Armada Berjaya go up and down completely randomly.

Pair Corralation between Jakarta Setiabudi and Armada Berjaya

Assuming the 90 days trading horizon Jakarta Setiabudi Internasional is expected to generate 5.09 times more return on investment than Armada Berjaya. However, Jakarta Setiabudi is 5.09 times more volatile than Armada Berjaya Trans. It trades about 0.3 of its potential returns per unit of risk. Armada Berjaya Trans is currently generating about -0.1 per unit of risk. If you would invest  188,000  in Jakarta Setiabudi Internasional on September 15, 2024 and sell it today you would earn a total of  892,000  from holding Jakarta Setiabudi Internasional or generate 474.47% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.44%
Values	Daily Returns

Jakarta Setiabudi Internasiona  vs.  Armada Berjaya Trans

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.

Armada Berjaya Trans

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Armada Berjaya Trans 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.

Pair Trading with Jakarta Setiabudi and Armada Berjaya

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

The idea behind Jakarta Setiabudi Internasional and Armada Berjaya Trans 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.