Correlation Between Natura City and PT Winner

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

Diversification Opportunities for Natura City and PT Winner

-0.05

Correlation Coefficient

Natura City  PT Winner

Good diversification

The 3 months correlation between Natura and WINR is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Natura City Developments and PT Winner Nusantara in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PT Winner Nusantara 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 PT Winner. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PT Winner Nusantara has no effect on the direction of Natura City i.e., Natura City and PT Winner go up and down completely randomly.

Pair Corralation between Natura City and PT Winner

Assuming the 90 days trading horizon Natura City is expected to generate 1.36 times less return on investment than PT Winner. In addition to that, Natura City is 1.5 times more volatile than PT Winner Nusantara. It trades about 0.01 of its total potential returns per unit of risk. PT Winner Nusantara is currently generating about 0.03 per unit of volatility. If you would invest  1,700  in PT Winner Nusantara on October 25, 2024 and sell it today you would earn a total of  0.00  from holding PT Winner Nusantara or generate 0.0% return on investment over 90 days.

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

Natura City Developments  vs.  PT Winner Nusantara

Natura City Developments

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Natura City Developments are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Natura City may actually be approaching a critical reversion point that can send shares even higher in February 2025.

PT Winner Nusantara

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in PT Winner Nusantara are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, PT Winner may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Natura City and PT Winner

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

The idea behind Natura City Developments and PT Winner Nusantara 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 Stocks Directory module to find actively traded stocks across global markets.