Correlation Between Natura City and Graha Layar

Can any of the company-specific risk be diversified away by investing in both Natura City and Graha Layar 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 Natura City and Graha Layar into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Natura City Developments and Graha Layar Prima, you can compare the effects of market volatilities on Natura City and Graha Layar 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 Natura City with a short position of Graha Layar. Check out your portfolio center. Please also check ongoing floating volatility patterns of Natura City and Graha Layar.

Diversification Opportunities for Natura City and Graha Layar

0.56

Correlation Coefficient

Natura City  Graha Layar

Very weak diversification

The 3 months correlation between Natura and Graha is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Natura City Developments and Graha Layar Prima in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Graha Layar Prima and Natura City 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 Natura City Developments are associated (or correlated) with Graha Layar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Graha Layar Prima has no effect on the direction of Natura City i.e., Natura City and Graha Layar go up and down completely randomly.

Pair Corralation between Natura City and Graha Layar

Assuming the 90 days trading horizon Natura City Developments is expected to generate 1.37 times more return on investment than Graha Layar. However, Natura City is 1.37 times more volatile than Graha Layar Prima. It trades about 0.03 of its potential returns per unit of risk. Graha Layar Prima is currently generating about -0.01 per unit of risk. If you would invest  14,500  in Natura City Developments on September 13, 2024 and sell it today you would lose (1,500) from holding Natura City Developments or give up 10.34% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	99.79%
Values	Daily Returns

Natura City Developments  vs.  Graha Layar Prima

Natura City Developments

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Natura City Developments are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Natura City disclosed solid returns over the last few months and may actually be approaching a breakup point.

Graha Layar Prima

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Graha Layar Prima are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent forward-looking signals, Graha Layar 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 Natura City and Graha Layar

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

The idea behind Natura City Developments and Graha Layar Prima 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.