Correlation Between Nusa Raya and Mitrabara Adiperdana

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

Diversification Opportunities for Nusa Raya and Mitrabara Adiperdana

0.2

Correlation Coefficient

Nusa Raya  Mitrabara Adiperdana

Modest diversification

The 3 months correlation between Nusa and Mitrabara is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Nusa Raya Cipta and Mitrabara Adiperdana PT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mitrabara Adiperdana 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 Mitrabara Adiperdana. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mitrabara Adiperdana has no effect on the direction of Nusa Raya i.e., Nusa Raya and Mitrabara Adiperdana go up and down completely randomly.

Pair Corralation between Nusa Raya and Mitrabara Adiperdana

Assuming the 90 days trading horizon Nusa Raya Cipta is expected to generate 1.94 times more return on investment than Mitrabara Adiperdana. However, Nusa Raya is 1.94 times more volatile than Mitrabara Adiperdana PT. It trades about -0.01 of its potential returns per unit of risk. Mitrabara Adiperdana PT is currently generating about -0.21 per unit of risk. If you would invest  36,200  in Nusa Raya Cipta on September 19, 2024 and sell it today you would lose (1,200) from holding Nusa Raya Cipta or give up 3.31% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.44%
Values	Daily Returns

Nusa Raya Cipta  vs.  Mitrabara Adiperdana PT

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.

Mitrabara Adiperdana

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Mitrabara Adiperdana 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.

Pair Trading with Nusa Raya and Mitrabara Adiperdana

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

The idea behind Nusa Raya Cipta and Mitrabara Adiperdana PT 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 Commodity Directory module to find actively traded commodities issued by global exchanges.