Correlation Between Mitra Pinasthika and Nusantara Infrastructure

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

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

Diversification Opportunities for Mitra Pinasthika and Nusantara Infrastructure

0.0

Correlation Coefficient

Mitra Pinasthika  Nusantara Infrastructure

Pay attention - limited upside

The 3 months correlation between Mitra and Nusantara is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Mitra Pinasthika Mustika and Nusantara Infrastructure Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nusantara Infrastructure and Mitra Pinasthika 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 Mitra Pinasthika Mustika are associated (or correlated) with Nusantara Infrastructure. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nusantara Infrastructure has no effect on the direction of Mitra Pinasthika i.e., Mitra Pinasthika and Nusantara Infrastructure go up and down completely randomly.

Pair Corralation between Mitra Pinasthika and Nusantara Infrastructure

Assuming the 90 days trading horizon Mitra Pinasthika is expected to generate 5.42 times less return on investment than Nusantara Infrastructure. But when comparing it to its historical volatility, Mitra Pinasthika Mustika is 2.71 times less risky than Nusantara Infrastructure. It trades about 0.03 of its potential returns per unit of risk. Nusantara Infrastructure Tbk is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  12,500  in Nusantara Infrastructure Tbk on September 15, 2024 and sell it today you would earn a total of  11,300  from holding Nusantara Infrastructure Tbk or generate 90.4% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Mitra Pinasthika Mustika  vs.  Nusantara Infrastructure Tbk

Mitra Pinasthika Mustika

Risk-Adjusted Performance

0 of 100

Very Weak

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

Nusantara Infrastructure

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nusantara Infrastructure Tbk has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent forward-looking signals, Nusantara Infrastructure 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 Mitra Pinasthika and Nusantara Infrastructure

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

The idea behind Mitra Pinasthika Mustika and Nusantara Infrastructure Tbk 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.