Correlation Between NFC Indonesia and GoTo Gojek

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

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

Diversification Opportunities for NFC Indonesia and GoTo Gojek

-0.37

Correlation Coefficient

NFC Indonesia  GoTo Gojek

Very good diversification

The 3 months correlation between NFC and GoTo is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding NFC Indonesia PT and GoTo Gojek Tokopedia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GoTo Gojek Tokopedia and NFC 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 NFC Indonesia PT are associated (or correlated) with GoTo Gojek. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GoTo Gojek Tokopedia has no effect on the direction of NFC Indonesia i.e., NFC Indonesia and GoTo Gojek go up and down completely randomly.

Pair Corralation between NFC Indonesia and GoTo Gojek

Assuming the 90 days trading horizon NFC Indonesia PT is expected to under-perform the GoTo Gojek. In addition to that, NFC Indonesia is 1.28 times more volatile than GoTo Gojek Tokopedia. It trades about -0.11 of its total potential returns per unit of risk. GoTo Gojek Tokopedia is currently generating about 0.08 per unit of volatility. If you would invest  6,500  in GoTo Gojek Tokopedia on September 16, 2024 and sell it today you would earn a total of  1,000.00  from holding GoTo Gojek Tokopedia or generate 15.38% return on investment over 90 days.

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

NFC Indonesia PT  vs.  GoTo Gojek Tokopedia

NFC Indonesia PT

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days NFC Indonesia PT has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's forward-looking signals remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

GoTo Gojek Tokopedia

Risk-Adjusted Performance

6 of 100

Modest

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

Pair Trading with NFC Indonesia and GoTo Gojek

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

The idea behind NFC Indonesia PT and GoTo Gojek Tokopedia 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.