Correlation Between Royalindo Investa and Nusa Raya

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

By analyzing existing cross correlation between Royalindo Investa Wijaya and Nusa Raya Cipta, you can compare the effects of market volatilities on Royalindo Investa and Nusa Raya 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 Royalindo Investa with a short position of Nusa Raya. Check out your portfolio center. Please also check ongoing floating volatility patterns of Royalindo Investa and Nusa Raya.

Diversification Opportunities for Royalindo Investa and Nusa Raya

-0.49

Correlation Coefficient

Royalindo Investa  Nusa Raya

Very good diversification

The 3 months correlation between Royalindo and Nusa is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Royalindo Investa Wijaya and Nusa Raya Cipta in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nusa Raya Cipta and Royalindo Investa 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 Royalindo Investa Wijaya are associated (or correlated) with Nusa Raya. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nusa Raya Cipta has no effect on the direction of Royalindo Investa i.e., Royalindo Investa and Nusa Raya go up and down completely randomly.

Pair Corralation between Royalindo Investa and Nusa Raya

Assuming the 90 days trading horizon Royalindo Investa Wijaya is expected to generate 5.27 times more return on investment than Nusa Raya. However, Royalindo Investa is 5.27 times more volatile than Nusa Raya Cipta. It trades about 0.1 of its potential returns per unit of risk. Nusa Raya Cipta is currently generating about -0.12 per unit of risk. If you would invest  11,100  in Royalindo Investa Wijaya on December 21, 2024 and sell it today you would earn a total of  3,100  from holding Royalindo Investa Wijaya or generate 27.93% return on investment over 90 days.

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

Royalindo Investa Wijaya  vs.  Nusa Raya Cipta

Royalindo Investa Wijaya

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Royalindo Investa Wijaya are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Royalindo Investa disclosed solid returns over the last few months and may actually be approaching a breakup point.

Nusa Raya Cipta

Risk-Adjusted Performance

Very Weak

Over the last 90 days Nusa Raya Cipta 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.

Pair Trading with Royalindo Investa and Nusa Raya

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

The idea behind Royalindo Investa Wijaya and Nusa Raya Cipta 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.