Correlation Between Ultra Jaya and Sido Muncul

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

By analyzing existing cross correlation between Ultra Jaya Milk and Sido Muncul PT, you can compare the effects of market volatilities on Ultra Jaya and Sido Muncul 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 Ultra Jaya with a short position of Sido Muncul. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ultra Jaya and Sido Muncul.

Diversification Opportunities for Ultra Jaya and Sido Muncul

0.86

Correlation Coefficient

Ultra Jaya  Sido Muncul

Very poor diversification

The 3 months correlation between Ultra and Sido is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Ultra Jaya Milk and Sido Muncul PT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sido Muncul PT and Ultra Jaya 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 Ultra Jaya Milk are associated (or correlated) with Sido Muncul. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sido Muncul PT has no effect on the direction of Ultra Jaya i.e., Ultra Jaya and Sido Muncul go up and down completely randomly.

Pair Corralation between Ultra Jaya and Sido Muncul

Assuming the 90 days trading horizon Ultra Jaya Milk is expected to generate 0.95 times more return on investment than Sido Muncul. However, Ultra Jaya Milk is 1.05 times less risky than Sido Muncul. It trades about 0.03 of its potential returns per unit of risk. Sido Muncul PT is currently generating about -0.01 per unit of risk. If you would invest  137,271  in Ultra Jaya Milk on September 26, 2024 and sell it today you would earn a total of  27,729  from holding Ultra Jaya Milk or generate 20.2% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	99.79%
Values	Daily Returns

Ultra Jaya Milk  vs.  Sido Muncul PT

Ultra Jaya Milk

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ultra Jaya Milk 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.

Sido Muncul PT

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sido Muncul PT 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 Ultra Jaya and Sido Muncul

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

The idea behind Ultra Jaya Milk and Sido Muncul PT 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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.