Correlation Between NMI Holdings and PT Barito

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

By analyzing existing cross correlation between NMI Holdings and PT Barito Pacific, you can compare the effects of market volatilities on NMI Holdings and PT Barito 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 NMI Holdings with a short position of PT Barito. Check out your portfolio center. Please also check ongoing floating volatility patterns of NMI Holdings and PT Barito.

Diversification Opportunities for NMI Holdings and PT Barito

0.54

Correlation Coefficient

NMI Holdings  PT Barito

Very weak diversification

The 3 months correlation between NMI and OB8 is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding NMI Holdings and PT Barito Pacific in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PT Barito Pacific and NMI Holdings 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 NMI Holdings are associated (or correlated) with PT Barito. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PT Barito Pacific has no effect on the direction of NMI Holdings i.e., NMI Holdings and PT Barito go up and down completely randomly.

Pair Corralation between NMI Holdings and PT Barito

Assuming the 90 days horizon NMI Holdings is expected to generate 0.33 times more return on investment than PT Barito. However, NMI Holdings is 3.0 times less risky than PT Barito. It trades about -0.13 of its potential returns per unit of risk. PT Barito Pacific is currently generating about -0.06 per unit of risk. If you would invest  3,600  in NMI Holdings on December 17, 2024 and sell it today you would lose (440.00) from holding NMI Holdings or give up 12.22% of portfolio value over 90 days.

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

NMI Holdings  vs.  PT Barito Pacific

NMI Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days NMI Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

PT Barito Pacific

Risk-Adjusted Performance

Very Weak

Over the last 90 days PT Barito Pacific has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with NMI Holdings and PT Barito

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

The idea behind NMI Holdings and PT Barito Pacific 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.