Correlation Between Obm Drilchem and Nusa Palapa

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

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

Diversification Opportunities for Obm Drilchem and Nusa Palapa

0.25

Correlation Coefficient

Obm Drilchem  Nusa Palapa

Modest diversification

The 3 months correlation between Obm and Nusa is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Obm Drilchem PT and Nusa Palapa Gemilang in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nusa Palapa Gemilang and Obm Drilchem 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 Obm Drilchem PT are associated (or correlated) with Nusa Palapa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nusa Palapa Gemilang has no effect on the direction of Obm Drilchem i.e., Obm Drilchem and Nusa Palapa go up and down completely randomly.

Pair Corralation between Obm Drilchem and Nusa Palapa

Assuming the 90 days trading horizon Obm Drilchem PT is expected to under-perform the Nusa Palapa. But the stock apears to be less risky and, when comparing its historical volatility, Obm Drilchem PT is 2.02 times less risky than Nusa Palapa. The stock trades about -0.04 of its potential returns per unit of risk. The Nusa Palapa Gemilang is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  3,500  in Nusa Palapa Gemilang on September 15, 2024 and sell it today you would earn a total of  100.00  from holding Nusa Palapa Gemilang or generate 2.86% return on investment over 90 days.

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

Obm Drilchem PT  vs.  Nusa Palapa Gemilang

Obm Drilchem PT

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Obm Drilchem PT has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent forward-looking signals, Obm Drilchem is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Nusa Palapa Gemilang

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Nusa Palapa Gemilang are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite quite weak forward-looking signals, Nusa Palapa may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Obm Drilchem and Nusa Palapa

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

The idea behind Obm Drilchem PT and Nusa Palapa Gemilang 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.