Correlation Between Natura City and Pollux Investasi

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

Diversification Opportunities for Natura City and Pollux Investasi

0.79

Correlation Coefficient

Natura City  Pollux Investasi

Poor diversification

The 3 months correlation between Natura and Pollux is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Natura City Developments and Pollux Investasi Internasional in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pollux Investasi Int 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 Pollux Investasi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pollux Investasi Int has no effect on the direction of Natura City i.e., Natura City and Pollux Investasi go up and down completely randomly.

Pair Corralation between Natura City and Pollux Investasi

Assuming the 90 days trading horizon Natura City Developments is expected to under-perform the Pollux Investasi. In addition to that, Natura City is 8.17 times more volatile than Pollux Investasi Internasional. It trades about -0.15 of its total potential returns per unit of risk. Pollux Investasi Internasional is currently generating about -0.1 per unit of volatility. If you would invest  77,000  in Pollux Investasi Internasional on December 22, 2024 and sell it today you would lose (2,000) from holding Pollux Investasi Internasional or give up 2.6% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.31%
Values	Daily Returns

Natura City Developments  vs.  Pollux Investasi Internasional

Natura City Developments

Risk-Adjusted Performance

Very Weak

Over the last 90 days Natura City Developments has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's forward-looking signals remain quite persistent which may send shares a bit higher in April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pollux Investasi Int

Risk-Adjusted Performance

Very Weak

Over the last 90 days Pollux Investasi Internasional has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent forward-looking signals, Pollux Investasi 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 Pollux Investasi

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

The idea behind Natura City Developments and Pollux Investasi Internasional 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.