Correlation Between Natura City and Batavia Prosperindo

Can any of the company-specific risk be diversified away by investing in both Natura City and Batavia Prosperindo 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 Batavia Prosperindo 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 Batavia Prosperindo Trans, you can compare the effects of market volatilities on Natura City and Batavia Prosperindo 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 Batavia Prosperindo. Check out your portfolio center. Please also check ongoing floating volatility patterns of Natura City and Batavia Prosperindo.

Diversification Opportunities for Natura City and Batavia Prosperindo

-0.58

Correlation Coefficient

Natura City  Batavia Prosperindo

Excellent diversification

The 3 months correlation between Natura and Batavia is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Natura City Developments and Batavia Prosperindo Trans in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Batavia Prosperindo Trans 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 Batavia Prosperindo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Batavia Prosperindo Trans has no effect on the direction of Natura City i.e., Natura City and Batavia Prosperindo go up and down completely randomly.

Pair Corralation between Natura City and Batavia Prosperindo

Assuming the 90 days trading horizon Natura City Developments is expected to generate 5.7 times more return on investment than Batavia Prosperindo. However, Natura City is 5.7 times more volatile than Batavia Prosperindo Trans. It trades about 0.12 of its potential returns per unit of risk. Batavia Prosperindo Trans is currently generating about -0.12 per unit of risk. If you would invest  8,100  in Natura City Developments on September 14, 2024 and sell it today you would earn a total of  4,900  from holding Natura City Developments or generate 60.49% return on investment over 90 days.

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

Natura City Developments  vs.  Batavia Prosperindo Trans

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.

Batavia Prosperindo Trans

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Batavia Prosperindo Trans 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.

Pair Trading with Natura City and Batavia Prosperindo

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

The idea behind Natura City Developments and Batavia Prosperindo Trans 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.