Correlation Between PT Indo and Nanjing Panda

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

Diversification Opportunities for PT Indo and Nanjing Panda

0.12

Correlation Coefficient

PT Indo  Nanjing Panda

Average diversification

The 3 months correlation between 3IB and Nanjing is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding PT Indo Tambangraya and Nanjing Panda Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nanjing Panda Electronics 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 Nanjing Panda. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nanjing Panda Electronics has no effect on the direction of PT Indo i.e., PT Indo and Nanjing Panda go up and down completely randomly.

Pair Corralation between PT Indo and Nanjing Panda

If you would invest  140.00  in PT Indo Tambangraya on October 9, 2024 and sell it today you would earn a total of  13.00  from holding PT Indo Tambangraya or generate 9.29% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	97.3%
Values	Daily Returns

PT Indo Tambangraya  vs.  Nanjing Panda Electronics

PT Indo Tambangraya

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in PT Indo Tambangraya are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, PT Indo may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Nanjing Panda Electronics

Risk-Adjusted Performance

0 of 100

OK

Over the last 90 days Nanjing Panda Electronics has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly fragile basic indicators, Nanjing Panda reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with PT Indo and Nanjing Panda

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

The idea behind PT Indo Tambangraya and Nanjing Panda Electronics 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.