Correlation Between Metro Healthcare and Bank Nationalnobu

Can any of the company-specific risk be diversified away by investing in both Metro Healthcare and Bank Nationalnobu 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 Metro Healthcare and Bank Nationalnobu into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Metro Healthcare Indonesia and Bank Nationalnobu Tbk, you can compare the effects of market volatilities on Metro Healthcare and Bank Nationalnobu 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 Metro Healthcare with a short position of Bank Nationalnobu. Check out your portfolio center. Please also check ongoing floating volatility patterns of Metro Healthcare and Bank Nationalnobu.

Diversification Opportunities for Metro Healthcare and Bank Nationalnobu

0.07

Correlation Coefficient

Metro Healthcare  Bank Nationalnobu

Significant diversification

The 3 months correlation between Metro and Bank is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Metro Healthcare Indonesia and Bank Nationalnobu Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bank Nationalnobu Tbk and Metro Healthcare 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 Metro Healthcare Indonesia are associated (or correlated) with Bank Nationalnobu. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bank Nationalnobu Tbk has no effect on the direction of Metro Healthcare i.e., Metro Healthcare and Bank Nationalnobu go up and down completely randomly.

Pair Corralation between Metro Healthcare and Bank Nationalnobu

Assuming the 90 days trading horizon Metro Healthcare Indonesia is expected to under-perform the Bank Nationalnobu. In addition to that, Metro Healthcare is 1.32 times more volatile than Bank Nationalnobu Tbk. It trades about -0.02 of its total potential returns per unit of risk. Bank Nationalnobu Tbk is currently generating about 0.03 per unit of volatility. If you would invest  49,600  in Bank Nationalnobu Tbk on December 2, 2024 and sell it today you would earn a total of  8,900  from holding Bank Nationalnobu Tbk or generate 17.94% return on investment over 90 days.

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

Metro Healthcare Indonesia  vs.  Bank Nationalnobu Tbk

Metro Healthcare Ind

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Metro Healthcare Indonesia are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Metro Healthcare disclosed solid returns over the last few months and may actually be approaching a breakup point.

Bank Nationalnobu Tbk

Risk-Adjusted Performance

Very Weak

Over the last 90 days Bank Nationalnobu Tbk has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent forward-looking signals, Bank Nationalnobu is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Metro Healthcare and Bank Nationalnobu

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

The idea behind Metro Healthcare Indonesia and Bank Nationalnobu Tbk 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.