Correlation Between PT Indonesia and Capitol Nusantara

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

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

Diversification Opportunities for PT Indonesia and Capitol Nusantara

0.31

Correlation Coefficient

PT Indonesia  Capitol Nusantara

Weak diversification

The 3 months correlation between IPCC and Capitol is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding PT Indonesia Kendaraan and Capitol Nusantara Indonesia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Capitol Nusantara and PT Indonesia 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 PT Indonesia Kendaraan 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 PT Indonesia i.e., PT Indonesia and Capitol Nusantara go up and down completely randomly.

Pair Corralation between PT Indonesia and Capitol Nusantara

Assuming the 90 days trading horizon PT Indonesia Kendaraan is expected to generate 0.39 times more return on investment than Capitol Nusantara. However, PT Indonesia Kendaraan is 2.59 times less risky than Capitol Nusantara. It trades about 0.06 of its potential returns per unit of risk. Capitol Nusantara Indonesia is currently generating about -0.01 per unit of risk. If you would invest  46,566  in PT Indonesia Kendaraan on September 18, 2024 and sell it today you would earn a total of  24,434  from holding PT Indonesia Kendaraan or generate 52.47% return on investment over 90 days.

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

PT Indonesia Kendaraan  vs.  Capitol Nusantara Indonesia

PT Indonesia Kendaraan

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in PT Indonesia Kendaraan are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, PT Indonesia may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Capitol Nusantara

Risk-Adjusted Performance

1 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Capitol Nusantara Indonesia are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent forward-looking signals, Capitol Nusantara 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 PT Indonesia and Capitol Nusantara

The main advantage of trading using opposite PT Indonesia and Capitol Nusantara positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PT Indonesia 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 PT Indonesia Kendaraan 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..