Correlation Between Fast Food and Bank Nationalnobu

Can any of the company-specific risk be diversified away by investing in both Fast Food and Bank Nationalnobu 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 Fast Food and Bank Nationalnobu into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Fast Food Indonesia and Bank Nationalnobu Tbk, you can compare the effects of market volatilities on Fast Food and Bank Nationalnobu 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 Fast Food with a short position of Bank Nationalnobu. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fast Food and Bank Nationalnobu.

Diversification Opportunities for Fast Food and Bank Nationalnobu

-0.39

Correlation Coefficient

Fast Food  Bank Nationalnobu

Very good diversification

The 3 months correlation between Fast and Bank is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Fast Food Indonesia and Bank Nationalnobu Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bank Nationalnobu Tbk and Fast Food 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 Fast Food Indonesia are associated (or correlated) with Bank Nationalnobu. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bank Nationalnobu Tbk has no effect on the direction of Fast Food i.e., Fast Food and Bank Nationalnobu go up and down completely randomly.

Pair Corralation between Fast Food and Bank Nationalnobu

Assuming the 90 days trading horizon Fast Food Indonesia is expected to under-perform the Bank Nationalnobu. In addition to that, Fast Food is 1.91 times more volatile than Bank Nationalnobu Tbk. It trades about -0.38 of its total potential returns per unit of risk. Bank Nationalnobu Tbk is currently generating about -0.04 per unit of volatility. If you would invest  67,500  in Bank Nationalnobu Tbk on September 5, 2024 and sell it today you would lose (1,000.00) from holding Bank Nationalnobu Tbk or give up 1.48% of portfolio value over 90 days.

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

Fast Food Indonesia  vs.  Bank Nationalnobu Tbk

Fast Food Indonesia

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Fast Food Indonesia 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.

Bank Nationalnobu Tbk

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Bank Nationalnobu Tbk are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Bank Nationalnobu may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Fast Food and Bank Nationalnobu

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

The idea behind Fast Food Indonesia and Bank Nationalnobu Tbk 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.

Check out your portfolio center.

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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.