Correlation Between Nusa Konstruksi and Jaya Real

Can any of the company-specific risk be diversified away by investing in both Nusa Konstruksi and Jaya Real 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 Jaya Real 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 Jaya Real Property, you can compare the effects of market volatilities on Nusa Konstruksi and Jaya Real 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 Jaya Real. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nusa Konstruksi and Jaya Real.

Diversification Opportunities for Nusa Konstruksi and Jaya Real

-0.57

Correlation Coefficient

Nusa Konstruksi  Jaya Real

Excellent diversification

The 3 months correlation between Nusa and Jaya is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Nusa Konstruksi Enjiniring and Jaya Real Property in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jaya Real Property 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 Jaya Real. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jaya Real Property has no effect on the direction of Nusa Konstruksi i.e., Nusa Konstruksi and Jaya Real go up and down completely randomly.

Pair Corralation between Nusa Konstruksi and Jaya Real

Assuming the 90 days trading horizon Nusa Konstruksi Enjiniring is expected to under-perform the Jaya Real. In addition to that, Nusa Konstruksi is 2.28 times more volatile than Jaya Real Property. It trades about -0.05 of its total potential returns per unit of risk. Jaya Real Property is currently generating about 0.12 per unit of volatility. If you would invest  45,170  in Jaya Real Property on October 12, 2024 and sell it today you would earn a total of  30,330  from holding Jaya Real Property or generate 67.15% return on investment over 90 days.

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

Nusa Konstruksi Enjiniring  vs.  Jaya Real Property

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.

Jaya Real Property

Risk-Adjusted Performance

21 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Jaya Real Property are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Jaya Real disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Nusa Konstruksi and Jaya Real

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

The idea behind Nusa Konstruksi Enjiniring and Jaya Real Property 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..