Correlation Between Natura City and Jaya Sukses
Can any of the company-specific risk be diversified away by investing in both Natura City and Jaya Sukses 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 Natura City and Jaya Sukses into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Natura City Developments and Jaya Sukses Makmur, you can compare the effects of market volatilities on Natura City and Jaya Sukses 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 Natura City with a short position of Jaya Sukses. Check out your portfolio center. Please also check ongoing floating volatility patterns of Natura City and Jaya Sukses.
Diversification Opportunities for Natura City and Jaya Sukses
0.27 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Natura and Jaya is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Natura City Developments and Jaya Sukses Makmur in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jaya Sukses Makmur and Natura 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 Natura City Developments are associated (or correlated) with Jaya Sukses. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jaya Sukses Makmur has no effect on the direction of Natura City i.e., Natura City and Jaya Sukses go up and down completely randomly.
Pair Corralation between Natura City and Jaya Sukses
Assuming the 90 days trading horizon Natura City Developments is expected to generate 9.28 times more return on investment than Jaya Sukses. However, Natura City is 9.28 times more volatile than Jaya Sukses Makmur. It trades about 0.02 of its potential returns per unit of risk. Jaya Sukses Makmur is currently generating about 0.01 per unit of risk. If you would invest 13,900 in Natura City Developments on September 26, 2024 and sell it today you would lose (3,100) from holding Natura City Developments or give up 22.3% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Natura City Developments vs. Jaya Sukses Makmur
Performance |
Timeline |
Natura City Developments |
Jaya Sukses Makmur |
Natura City and Jaya Sukses Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Natura City and Jaya Sukses
The main advantage of trading using opposite Natura City and Jaya Sukses positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Natura City position performs unexpectedly, Jaya Sukses 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 Jaya Sukses will offset losses from the drop in Jaya Sukses' long position.Natura City vs. Modernland Realty Ltd | Natura City vs. Jakarta Int Hotels | Natura City vs. Intiland Development Tbk |
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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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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