Correlation Between Inti Bangun and Austindo Nusantara

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

By analyzing existing cross correlation between Inti Bangun Sejahtera and Austindo Nusantara Jaya, you can compare the effects of market volatilities on Inti Bangun and Austindo Nusantara 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 Inti Bangun with a short position of Austindo Nusantara. Check out your portfolio center. Please also check ongoing floating volatility patterns of Inti Bangun and Austindo Nusantara.

Diversification Opportunities for Inti Bangun and Austindo Nusantara

-0.38

Correlation Coefficient

Inti Bangun  Austindo Nusantara

Very good diversification

The 3 months correlation between Inti and Austindo is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Inti Bangun Sejahtera and Austindo Nusantara Jaya in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Austindo Nusantara Jaya and Inti Bangun 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 Inti Bangun Sejahtera are associated (or correlated) with Austindo Nusantara. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Austindo Nusantara Jaya has no effect on the direction of Inti Bangun i.e., Inti Bangun and Austindo Nusantara go up and down completely randomly.

Pair Corralation between Inti Bangun and Austindo Nusantara

Assuming the 90 days trading horizon Inti Bangun is expected to generate 66.83 times less return on investment than Austindo Nusantara. In addition to that, Inti Bangun is 1.22 times more volatile than Austindo Nusantara Jaya. It trades about 0.0 of its total potential returns per unit of risk. Austindo Nusantara Jaya is currently generating about 0.02 per unit of volatility. If you would invest  63,914  in Austindo Nusantara Jaya on October 12, 2024 and sell it today you would earn a total of  7,586  from holding Austindo Nusantara Jaya or generate 11.87% return on investment over 90 days.

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

Inti Bangun Sejahtera  vs.  Austindo Nusantara Jaya

Inti Bangun Sejahtera

Risk-Adjusted Performance

9 of 100

OK

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

Austindo Nusantara Jaya

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days Austindo Nusantara Jaya has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent forward-looking signals, Austindo Nusantara is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Inti Bangun and Austindo Nusantara

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

The idea behind Inti Bangun Sejahtera and Austindo Nusantara Jaya 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 Global Correlations module to find global opportunities by holding instruments from different markets.