Correlation Between Alkindo Naratama and Austindo Nusantara

Can any of the company-specific risk be diversified away by investing in both Alkindo Naratama and Austindo Nusantara 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 Alkindo Naratama and Austindo Nusantara into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Alkindo Naratama Tbk and Austindo Nusantara Jaya, you can compare the effects of market volatilities on Alkindo Naratama and Austindo Nusantara 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 Alkindo Naratama with a short position of Austindo Nusantara. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alkindo Naratama and Austindo Nusantara.

Diversification Opportunities for Alkindo Naratama and Austindo Nusantara

-0.53

Correlation Coefficient

Alkindo Naratama  Austindo Nusantara

Excellent diversification

The 3 months correlation between Alkindo and Austindo is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Alkindo Naratama Tbk and Austindo Nusantara Jaya in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Austindo Nusantara Jaya and Alkindo Naratama 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 Alkindo Naratama Tbk are associated (or correlated) with Austindo Nusantara. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Austindo Nusantara Jaya has no effect on the direction of Alkindo Naratama i.e., Alkindo Naratama and Austindo Nusantara go up and down completely randomly.

Pair Corralation between Alkindo Naratama and Austindo Nusantara

Assuming the 90 days trading horizon Alkindo Naratama Tbk is expected to under-perform the Austindo Nusantara. In addition to that, Alkindo Naratama is 1.43 times more volatile than Austindo Nusantara Jaya. It trades about -0.04 of its total potential returns per unit of risk. Austindo Nusantara Jaya is currently generating about 0.22 per unit of volatility. If you would invest  73,500  in Austindo Nusantara Jaya on December 4, 2024 and sell it today you would earn a total of  22,500  from holding Austindo Nusantara Jaya or generate 30.61% return on investment over 90 days.

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

Alkindo Naratama Tbk  vs.  Austindo Nusantara Jaya

Alkindo Naratama Tbk

Risk-Adjusted Performance

Very Weak

Over the last 90 days Alkindo Naratama Tbk has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's forward-looking signals remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Austindo Nusantara Jaya

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Austindo Nusantara Jaya are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Austindo Nusantara disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Alkindo Naratama and Austindo Nusantara

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

The idea behind Alkindo Naratama Tbk and Austindo Nusantara Jaya 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.