Correlation Between Sentul City and Nusa Konstruksi

Can any of the company-specific risk be diversified away by investing in both Sentul City and Nusa Konstruksi 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 Sentul City and Nusa Konstruksi into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Sentul City Tbk and Nusa Konstruksi Enjiniring, you can compare the effects of market volatilities on Sentul City and Nusa Konstruksi 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 Sentul City with a short position of Nusa Konstruksi. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sentul City and Nusa Konstruksi.

Diversification Opportunities for Sentul City and Nusa Konstruksi

-0.68

Correlation Coefficient

Sentul City  Nusa Konstruksi

Excellent diversification

The 3 months correlation between Sentul and Nusa is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding Sentul City Tbk and Nusa Konstruksi Enjiniring in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nusa Konstruksi Enji and Sentul City 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 Sentul City Tbk are associated (or correlated) with Nusa Konstruksi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nusa Konstruksi Enji has no effect on the direction of Sentul City i.e., Sentul City and Nusa Konstruksi go up and down completely randomly.

Pair Corralation between Sentul City and Nusa Konstruksi

Assuming the 90 days trading horizon Sentul City Tbk is expected to generate 4.14 times more return on investment than Nusa Konstruksi. However, Sentul City is 4.14 times more volatile than Nusa Konstruksi Enjiniring. It trades about 0.24 of its potential returns per unit of risk. Nusa Konstruksi Enjiniring is currently generating about -0.12 per unit of risk. If you would invest  4,300  in Sentul City Tbk on September 15, 2024 and sell it today you would earn a total of  3,100  from holding Sentul City Tbk or generate 72.09% return on investment over 90 days.

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

Sentul City Tbk  vs.  Nusa Konstruksi Enjiniring

Sentul City Tbk

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Sentul City Tbk are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Sentul City disclosed solid returns over the last few months and may actually be approaching a breakup point.

Nusa Konstruksi Enji

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nusa Konstruksi Enjiniring has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's forward-looking signals remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Pair Trading with Sentul City and Nusa Konstruksi

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

The idea behind Sentul City Tbk and Nusa Konstruksi Enjiniring 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.