Correlation Between Nusa Raya and Total Bangun

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

Diversification Opportunities for Nusa Raya and Total Bangun

0.65

Correlation Coefficient

Nusa Raya  Total Bangun

Poor diversification

The 3 months correlation between Nusa and Total is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Nusa Raya Cipta and Total Bangun Persada in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Total Bangun Persada 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 Total Bangun. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Total Bangun Persada has no effect on the direction of Nusa Raya i.e., Nusa Raya and Total Bangun go up and down completely randomly.

Pair Corralation between Nusa Raya and Total Bangun

Assuming the 90 days trading horizon Nusa Raya Cipta is expected to under-perform the Total Bangun. But the stock apears to be less risky and, when comparing its historical volatility, Nusa Raya Cipta is 1.32 times less risky than Total Bangun. The stock trades about -0.02 of its potential returns per unit of risk. The Total Bangun Persada is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  62,500  in Total Bangun Persada on September 24, 2024 and sell it today you would earn a total of  4,000  from holding Total Bangun Persada or generate 6.4% return on investment over 90 days.

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

Nusa Raya Cipta  vs.  Total Bangun Persada

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.

Total Bangun Persada

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Total Bangun Persada are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Total Bangun may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Nusa Raya and Total Bangun

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

The idea behind Nusa Raya Cipta and Total Bangun Persada 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.