Correlation Between Sentral Mitra and Nusantara Voucher

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

By analyzing existing cross correlation between Sentral Mitra Informatika and Nusantara Voucher Distribution, you can compare the effects of market volatilities on Sentral Mitra and Nusantara Voucher 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 Sentral Mitra with a short position of Nusantara Voucher. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sentral Mitra and Nusantara Voucher.

Diversification Opportunities for Sentral Mitra and Nusantara Voucher

-0.5

Correlation Coefficient

Sentral Mitra  Nusantara Voucher

Very good diversification

The 3 months correlation between Sentral and Nusantara is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Sentral Mitra Informatika and Nusantara Voucher Distribution in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nusantara Voucher and Sentral Mitra 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 Sentral Mitra Informatika are associated (or correlated) with Nusantara Voucher. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nusantara Voucher has no effect on the direction of Sentral Mitra i.e., Sentral Mitra and Nusantara Voucher go up and down completely randomly.

Pair Corralation between Sentral Mitra and Nusantara Voucher

Assuming the 90 days trading horizon Sentral Mitra Informatika is expected to under-perform the Nusantara Voucher. But the stock apears to be less risky and, when comparing its historical volatility, Sentral Mitra Informatika is 1.69 times less risky than Nusantara Voucher. The stock trades about -0.02 of its potential returns per unit of risk. The Nusantara Voucher Distribution is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  12,500  in Nusantara Voucher Distribution on September 13, 2024 and sell it today you would earn a total of  2,700  from holding Nusantara Voucher Distribution or generate 21.6% return on investment over 90 days.

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

Sentral Mitra Informatika  vs.  Nusantara Voucher Distribution

Sentral Mitra Informatika

Risk-Adjusted Performance

0 of 100

Very Weak

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

Nusantara Voucher

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Nusantara Voucher Distribution are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Nusantara Voucher disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Sentral Mitra and Nusantara Voucher

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

The idea behind Sentral Mitra Informatika and Nusantara Voucher Distribution 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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.