Correlation Between Bima Sakti and Nusantara Almazia

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Can any of the company-specific risk be diversified away by investing in both Bima Sakti and Nusantara Almazia 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 Bima Sakti and Nusantara Almazia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bima Sakti Pertiwi and Nusantara Almazia, you can compare the effects of market volatilities on Bima Sakti and Nusantara Almazia 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 Bima Sakti with a short position of Nusantara Almazia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bima Sakti and Nusantara Almazia.

Diversification Opportunities for Bima Sakti and Nusantara Almazia

BimaNusantaraDiversified AwayBimaNusantaraDiversified Away100%
0.32
  Correlation Coefficient

Weak diversification

The 3 months correlation between Bima and Nusantara is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Bima Sakti Pertiwi and Nusantara Almazia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nusantara Almazia and Bima Sakti 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 Bima Sakti Pertiwi are associated (or correlated) with Nusantara Almazia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nusantara Almazia has no effect on the direction of Bima Sakti i.e., Bima Sakti and Nusantara Almazia go up and down completely randomly.

Pair Corralation between Bima Sakti and Nusantara Almazia

Assuming the 90 days trading horizon Bima Sakti Pertiwi is expected to generate 0.26 times more return on investment than Nusantara Almazia. However, Bima Sakti Pertiwi is 3.91 times less risky than Nusantara Almazia. It trades about -0.01 of its potential returns per unit of risk. Nusantara Almazia is currently generating about -0.01 per unit of risk. If you would invest  5,200  in Bima Sakti Pertiwi on September 25, 2024 and sell it today you would lose (100.00) from holding Bima Sakti Pertiwi or give up 1.92% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy98.44%
ValuesDaily Returns

Bima Sakti Pertiwi  vs.  Nusantara Almazia

 Performance 
JavaScript chart by amCharts 3.21.15OctNovDec -15-10-505101520
JavaScript chart by amCharts 3.21.15PAMG NZIA
       Timeline  
Bima Sakti Pertiwi 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Bima Sakti Pertiwi has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent forward-looking signals, Bima Sakti is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.
JavaScript chart by amCharts 3.21.15OctNovDecNovDec50515253545556
Nusantara Almazia 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Nusantara Almazia has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent forward-looking signals, Nusantara Almazia is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.
JavaScript chart by amCharts 3.21.15OctNovDecNovDec65707580859095100105

Bima Sakti and Nusantara Almazia Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-5.22-3.91-2.6-1.290.01.272.593.95.216.53 0.020.040.060.080.100.120.14
JavaScript chart by amCharts 3.21.15PAMG NZIA
       Returns  

Pair Trading with Bima Sakti and Nusantara Almazia

The main advantage of trading using opposite Bima Sakti and Nusantara Almazia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bima Sakti position performs unexpectedly, Nusantara Almazia 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 Nusantara Almazia will offset losses from the drop in Nusantara Almazia's long position.
The idea behind Bima Sakti Pertiwi and Nusantara Almazia 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.

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