Correlation Between Nusa Raya and PT Indonesia

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

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

Diversification Opportunities for Nusa Raya and PT Indonesia

0.14

Correlation Coefficient

Nusa Raya  PT Indonesia

Average diversification

The 3 months correlation between Nusa and IPCC is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Nusa Raya Cipta and PT Indonesia Kendaraan in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PT Indonesia Kendaraan and Nusa Raya 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 Nusa Raya Cipta are associated (or correlated) with PT Indonesia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PT Indonesia Kendaraan has no effect on the direction of Nusa Raya i.e., Nusa Raya and PT Indonesia go up and down completely randomly.

Pair Corralation between Nusa Raya and PT Indonesia

Assuming the 90 days trading horizon Nusa Raya Cipta is expected to under-perform the PT Indonesia. In addition to that, Nusa Raya is 1.55 times more volatile than PT Indonesia Kendaraan. It trades about -0.09 of its total potential returns per unit of risk. PT Indonesia Kendaraan is currently generating about 0.07 per unit of volatility. If you would invest  66,193  in PT Indonesia Kendaraan on September 19, 2024 and sell it today you would earn a total of  2,807  from holding PT Indonesia Kendaraan or generate 4.24% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	97.62%
Values	Daily Returns

Nusa Raya Cipta  vs.  PT Indonesia Kendaraan

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.

PT Indonesia Kendaraan

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in PT Indonesia Kendaraan are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent forward-looking signals, PT Indonesia 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 Nusa Raya and PT Indonesia

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

The idea behind Nusa Raya Cipta and PT Indonesia Kendaraan 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.