Correlation Between Nusantara Voucher and Sentral Mitra

Can any of the company-specific risk be diversified away by investing in both Nusantara Voucher and Sentral Mitra 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 Nusantara Voucher and Sentral Mitra into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Nusantara Voucher Distribution and Sentral Mitra Informatika, you can compare the effects of market volatilities on Nusantara Voucher and Sentral Mitra 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 Nusantara Voucher with a short position of Sentral Mitra. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nusantara Voucher and Sentral Mitra.

Diversification Opportunities for Nusantara Voucher and Sentral Mitra

-0.27

Correlation Coefficient

Nusantara Voucher  Sentral Mitra

Very good diversification

The 3 months correlation between Nusantara and Sentral is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Nusantara Voucher Distribution and Sentral Mitra Informatika in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sentral Mitra Informatika and Nusantara Voucher 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 Nusantara Voucher Distribution are associated (or correlated) with Sentral Mitra. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sentral Mitra Informatika has no effect on the direction of Nusantara Voucher i.e., Nusantara Voucher and Sentral Mitra go up and down completely randomly.

Pair Corralation between Nusantara Voucher and Sentral Mitra

Assuming the 90 days trading horizon Nusantara Voucher Distribution is expected to generate 1.38 times more return on investment than Sentral Mitra. However, Nusantara Voucher is 1.38 times more volatile than Sentral Mitra Informatika. It trades about 0.12 of its potential returns per unit of risk. Sentral Mitra Informatika is currently generating about -0.07 per unit of risk. If you would invest  12,000  in Nusantara Voucher Distribution on September 2, 2024 and sell it today you would earn a total of  5,100  from holding Nusantara Voucher Distribution or generate 42.5% return on investment over 90 days.

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

Nusantara Voucher Distribution  vs.  Sentral Mitra Informatika

Nusantara Voucher

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Nusantara Voucher Distribution are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Nusantara Voucher disclosed solid returns over the last few months and may actually be approaching a breakup point.

Sentral Mitra Informatika

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sentral Mitra Informatika 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 January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Nusantara Voucher and Sentral Mitra

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

The idea behind Nusantara Voucher Distribution and Sentral Mitra Informatika 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 Transaction History module to view history of all your transactions and understand their impact on performance.