Correlation Between PT Indo and Nordic Semiconductor

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

By analyzing existing cross correlation between PT Indo Tambangraya and Nordic Semiconductor ASA, you can compare the effects of market volatilities on PT Indo and Nordic Semiconductor 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 PT Indo with a short position of Nordic Semiconductor. Check out your portfolio center. Please also check ongoing floating volatility patterns of PT Indo and Nordic Semiconductor.

Diversification Opportunities for PT Indo and Nordic Semiconductor

-0.04

Correlation Coefficient

PT Indo  Nordic Semiconductor

Good diversification

The 3 months correlation between 3IB and Nordic is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding PT Indo Tambangraya and Nordic Semiconductor ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nordic Semiconductor ASA and PT Indo 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 PT Indo Tambangraya are associated (or correlated) with Nordic Semiconductor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nordic Semiconductor ASA has no effect on the direction of PT Indo i.e., PT Indo and Nordic Semiconductor go up and down completely randomly.

Pair Corralation between PT Indo and Nordic Semiconductor

Assuming the 90 days trading horizon PT Indo Tambangraya is expected to generate 0.91 times more return on investment than Nordic Semiconductor. However, PT Indo Tambangraya is 1.09 times less risky than Nordic Semiconductor. It trades about 0.05 of its potential returns per unit of risk. Nordic Semiconductor ASA is currently generating about -0.07 per unit of risk. If you would invest  130.00  in PT Indo Tambangraya on September 29, 2024 and sell it today you would earn a total of  18.00  from holding PT Indo Tambangraya or generate 13.85% return on investment over 90 days.

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

PT Indo Tambangraya  vs.  Nordic Semiconductor ASA

PT Indo Tambangraya

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PT Indo Tambangraya has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Nordic Semiconductor ASA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nordic Semiconductor ASA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Nordic Semiconductor is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with PT Indo and Nordic Semiconductor

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

The idea behind PT Indo Tambangraya and Nordic Semiconductor ASA 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.