Correlation Between Pt Pradiksi and PT Jhonlin

Can any of the company-specific risk be diversified away by investing in both Pt Pradiksi and PT Jhonlin 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 Pt Pradiksi and PT Jhonlin into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Pt Pradiksi Gunatama and PT Jhonlin Agro, you can compare the effects of market volatilities on Pt Pradiksi and PT Jhonlin 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 Pt Pradiksi with a short position of PT Jhonlin. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pt Pradiksi and PT Jhonlin.

Diversification Opportunities for Pt Pradiksi and PT Jhonlin

-0.42

Correlation Coefficient

Pt Pradiksi  PT Jhonlin

Very good diversification

The 3 months correlation between PGUN and JARR is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Pt Pradiksi Gunatama and PT Jhonlin Agro in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PT Jhonlin Agro and Pt Pradiksi 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 Pt Pradiksi Gunatama are associated (or correlated) with PT Jhonlin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PT Jhonlin Agro has no effect on the direction of Pt Pradiksi i.e., Pt Pradiksi and PT Jhonlin go up and down completely randomly.

Pair Corralation between Pt Pradiksi and PT Jhonlin

Assuming the 90 days trading horizon Pt Pradiksi Gunatama is expected to under-perform the PT Jhonlin. But the stock apears to be less risky and, when comparing its historical volatility, Pt Pradiksi Gunatama is 11.34 times less risky than PT Jhonlin. The stock trades about -0.08 of its potential returns per unit of risk. The PT Jhonlin Agro is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  27,600  in PT Jhonlin Agro on September 13, 2024 and sell it today you would earn a total of  6,400  from holding PT Jhonlin Agro or generate 23.19% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.41%
Values	Daily Returns

Pt Pradiksi Gunatama  vs.  PT Jhonlin Agro

Pt Pradiksi Gunatama

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Pt Pradiksi Gunatama has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent forward-looking signals, Pt Pradiksi is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

PT Jhonlin Agro

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in PT Jhonlin Agro are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, PT Jhonlin disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Pt Pradiksi and PT Jhonlin

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

The idea behind Pt Pradiksi Gunatama and PT Jhonlin Agro 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.