Correlation Between Urban Jakarta and Gihon Telekomunikasi

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

By analyzing existing cross correlation between Urban Jakarta Propertindo and Gihon Telekomunikasi Indonesia, you can compare the effects of market volatilities on Urban Jakarta and Gihon Telekomunikasi 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 Urban Jakarta with a short position of Gihon Telekomunikasi. Check out your portfolio center. Please also check ongoing floating volatility patterns of Urban Jakarta and Gihon Telekomunikasi.

Diversification Opportunities for Urban Jakarta and Gihon Telekomunikasi

-0.28

Correlation Coefficient

Urban Jakarta  Gihon Telekomunikasi

Very good diversification

The 3 months correlation between Urban and Gihon is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Urban Jakarta Propertindo and Gihon Telekomunikasi Indonesia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gihon Telekomunikasi and Urban Jakarta 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 Urban Jakarta Propertindo are associated (or correlated) with Gihon Telekomunikasi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gihon Telekomunikasi has no effect on the direction of Urban Jakarta i.e., Urban Jakarta and Gihon Telekomunikasi go up and down completely randomly.

Pair Corralation between Urban Jakarta and Gihon Telekomunikasi

Assuming the 90 days trading horizon Urban Jakarta Propertindo is expected to under-perform the Gihon Telekomunikasi. In addition to that, Urban Jakarta is 2.08 times more volatile than Gihon Telekomunikasi Indonesia. It trades about -0.04 of its total potential returns per unit of risk. Gihon Telekomunikasi Indonesia is currently generating about 0.0 per unit of volatility. If you would invest  195,775  in Gihon Telekomunikasi Indonesia on February 4, 2024 and sell it today you would lose (15,775) from holding Gihon Telekomunikasi Indonesia or give up 8.06% of portfolio value over 90 days.

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

Urban Jakarta Propertindo  vs.  Gihon Telekomunikasi Indonesia

Urban Jakarta Propertindo

Risk-Adjusted Performance

0 of 100

Very Weak

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

Gihon Telekomunikasi

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Gihon Telekomunikasi Indonesia has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Gihon Telekomunikasi 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 Urban Jakarta and Gihon Telekomunikasi

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

The idea behind Urban Jakarta Propertindo and Gihon Telekomunikasi Indonesia 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.