Correlation Between Mitra Pinasthika and Nusa Raya

Can any of the company-specific risk be diversified away by investing in both Mitra Pinasthika and Nusa Raya 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 Nusa Raya 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 Nusa Raya Cipta, you can compare the effects of market volatilities on Mitra Pinasthika and Nusa Raya 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 Nusa Raya. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mitra Pinasthika and Nusa Raya.

Diversification Opportunities for Mitra Pinasthika and Nusa Raya

0.02

Correlation Coefficient

Mitra Pinasthika  Nusa Raya

Significant diversification

The 3 months correlation between Mitra and Nusa is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Mitra Pinasthika Mustika and Nusa Raya Cipta in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nusa Raya Cipta 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 Nusa Raya. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nusa Raya Cipta has no effect on the direction of Mitra Pinasthika i.e., Mitra Pinasthika and Nusa Raya go up and down completely randomly.

Pair Corralation between Mitra Pinasthika and Nusa Raya

Assuming the 90 days trading horizon Mitra Pinasthika is expected to generate 2.75 times less return on investment than Nusa Raya. But when comparing it to its historical volatility, Mitra Pinasthika Mustika is 1.29 times less risky than Nusa Raya. It trades about 0.03 of its potential returns per unit of risk. Nusa Raya Cipta is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  24,342  in Nusa Raya Cipta on September 19, 2024 and sell it today you would earn a total of  10,658  from holding Nusa Raya Cipta or generate 43.78% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	99.79%
Values	Daily Returns

Mitra Pinasthika Mustika  vs.  Nusa Raya Cipta

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.

Nusa Raya Cipta

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nusa Raya Cipta has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent forward-looking signals, Nusa Raya 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 Nusa Raya

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

The idea behind Mitra Pinasthika Mustika and Nusa Raya Cipta 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.

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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.