Correlation Between Gozco Plantations and Nusa Konstruksi

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

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

Diversification Opportunities for Gozco Plantations and Nusa Konstruksi

-0.57

Correlation Coefficient

Gozco Plantations  Nusa Konstruksi

Excellent diversification

The 3 months correlation between Gozco and Nusa is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Gozco Plantations 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 Gozco Plantations 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 Gozco Plantations 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 Gozco Plantations i.e., Gozco Plantations and Nusa Konstruksi go up and down completely randomly.

Pair Corralation between Gozco Plantations and Nusa Konstruksi

Assuming the 90 days trading horizon Gozco Plantations Tbk is expected to generate 2.52 times more return on investment than Nusa Konstruksi. However, Gozco Plantations is 2.52 times more volatile than Nusa Konstruksi Enjiniring. It trades about 0.08 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  9,100  in Gozco Plantations Tbk on September 15, 2024 and sell it today you would earn a total of  1,000.00  from holding Gozco Plantations Tbk or generate 10.99% return on investment over 90 days.

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

Gozco Plantations Tbk  vs.  Nusa Konstruksi Enjiniring

Gozco Plantations Tbk

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Gozco Plantations Tbk are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Gozco Plantations may actually be approaching a critical reversion point that can send shares even higher in January 2025.

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 Gozco Plantations and Nusa Konstruksi

The main advantage of trading using opposite Gozco Plantations and Nusa Konstruksi positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gozco Plantations 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 Gozco Plantations 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.