Correlation Between Pelayaran Nasional and Capitol Nusantara

Can any of the company-specific risk be diversified away by investing in both Pelayaran Nasional and Capitol Nusantara 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 Pelayaran Nasional and Capitol Nusantara into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Pelayaran Nasional Bina and Capitol Nusantara Indonesia, you can compare the effects of market volatilities on Pelayaran Nasional and Capitol Nusantara 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 Pelayaran Nasional with a short position of Capitol Nusantara. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pelayaran Nasional and Capitol Nusantara.

Diversification Opportunities for Pelayaran Nasional and Capitol Nusantara

-0.03

Correlation Coefficient

Pelayaran Nasional  Capitol Nusantara

Good diversification

The 3 months correlation between Pelayaran and Capitol is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Pelayaran Nasional Bina and Capitol Nusantara Indonesia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Capitol Nusantara and Pelayaran Nasional 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 Pelayaran Nasional Bina are associated (or correlated) with Capitol Nusantara. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Capitol Nusantara has no effect on the direction of Pelayaran Nasional i.e., Pelayaran Nasional and Capitol Nusantara go up and down completely randomly.

Pair Corralation between Pelayaran Nasional and Capitol Nusantara

Assuming the 90 days trading horizon Pelayaran Nasional Bina is expected to under-perform the Capitol Nusantara. But the stock apears to be less risky and, when comparing its historical volatility, Pelayaran Nasional Bina is 1.63 times less risky than Capitol Nusantara. The stock trades about -0.03 of its potential returns per unit of risk. The Capitol Nusantara Indonesia is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  4,600  in Capitol Nusantara Indonesia on September 17, 2024 and sell it today you would earn a total of  300.00  from holding Capitol Nusantara Indonesia or generate 6.52% return on investment over 90 days.

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

Pelayaran Nasional Bina  vs.  Capitol Nusantara Indonesia

Pelayaran Nasional Bina

Risk-Adjusted Performance

0 of 100

Very Weak

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

Capitol Nusantara

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Capitol Nusantara Indonesia are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Capitol Nusantara may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Pelayaran Nasional and Capitol Nusantara

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

The idea behind Pelayaran Nasional Bina and Capitol Nusantara 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 Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.