Correlation Between Tanah Laut and Jakarta Int

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

By analyzing existing cross correlation between Tanah Laut Tbk and Jakarta Int Hotels, you can compare the effects of market volatilities on Tanah Laut and Jakarta Int 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 Tanah Laut with a short position of Jakarta Int. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tanah Laut and Jakarta Int.

Diversification Opportunities for Tanah Laut and Jakarta Int

0.79

Correlation Coefficient

Tanah Laut  Jakarta Int

Poor diversification

The 3 months correlation between Tanah and Jakarta is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Tanah Laut Tbk and Jakarta Int Hotels in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jakarta Int Hotels and Tanah Laut 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 Tanah Laut Tbk are associated (or correlated) with Jakarta Int. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jakarta Int Hotels has no effect on the direction of Tanah Laut i.e., Tanah Laut and Jakarta Int go up and down completely randomly.

Pair Corralation between Tanah Laut and Jakarta Int

Assuming the 90 days trading horizon Tanah Laut Tbk is expected to generate 0.98 times more return on investment than Jakarta Int. However, Tanah Laut Tbk is 1.02 times less risky than Jakarta Int. It trades about 0.22 of its potential returns per unit of risk. Jakarta Int Hotels is currently generating about -0.01 per unit of risk. If you would invest  7,800  in Tanah Laut Tbk on February 19, 2024 and sell it today you would earn a total of  500.00  from holding Tanah Laut Tbk or generate 6.41% return on investment over 90 days.

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

Tanah Laut Tbk  vs.  Jakarta Int Hotels

Tanah Laut Tbk

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Tanah Laut 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 basic indicators remain quite persistent which may send shares a bit higher in June 2024. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Jakarta Int Hotels

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Jakarta Int Hotels has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Jakarta Int 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 Tanah Laut and Jakarta Int

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

The idea behind Tanah Laut Tbk and Jakarta Int Hotels 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 Global Correlations module to find global opportunities by holding instruments from different markets.