Correlation Between Nusa Konstruksi and Perdana Gapura

Can any of the company-specific risk be diversified away by investing in both Nusa Konstruksi and Perdana Gapura 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 Nusa Konstruksi and Perdana Gapura into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Nusa Konstruksi Enjiniring and Perdana Gapura Prima, you can compare the effects of market volatilities on Nusa Konstruksi and Perdana Gapura 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 Nusa Konstruksi with a short position of Perdana Gapura. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nusa Konstruksi and Perdana Gapura.

Diversification Opportunities for Nusa Konstruksi and Perdana Gapura

0.9

Correlation Coefficient

Nusa Konstruksi  Perdana Gapura

Almost no diversification

The 3 months correlation between Nusa and Perdana is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Nusa Konstruksi Enjiniring and Perdana Gapura Prima in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Perdana Gapura Prima and Nusa Konstruksi 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 Nusa Konstruksi Enjiniring are associated (or correlated) with Perdana Gapura. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Perdana Gapura Prima has no effect on the direction of Nusa Konstruksi i.e., Nusa Konstruksi and Perdana Gapura go up and down completely randomly.

Pair Corralation between Nusa Konstruksi and Perdana Gapura

Assuming the 90 days trading horizon Nusa Konstruksi Enjiniring is expected to under-perform the Perdana Gapura. In addition to that, Nusa Konstruksi is 1.19 times more volatile than Perdana Gapura Prima. It trades about -0.05 of its total potential returns per unit of risk. Perdana Gapura Prima is currently generating about 0.0 per unit of volatility. If you would invest  9,156  in Perdana Gapura Prima on October 12, 2024 and sell it today you would lose (656.00) from holding Perdana Gapura Prima or give up 7.16% of portfolio value over 90 days.

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

Nusa Konstruksi Enjiniring  vs.  Perdana Gapura Prima

Nusa Konstruksi Enji

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nusa Konstruksi Enjiniring 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.

Perdana Gapura Prima

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Perdana Gapura Prima 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 February 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Nusa Konstruksi and Perdana Gapura

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

The idea behind Nusa Konstruksi Enjiniring and Perdana Gapura 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.