Correlation Between Kawasan Industri and Nusantara Infrastructure

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

By analyzing existing cross correlation between Kawasan Industri Jababeka and Nusantara Infrastructure Tbk, you can compare the effects of market volatilities on Kawasan Industri and Nusantara Infrastructure 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 Kawasan Industri with a short position of Nusantara Infrastructure. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kawasan Industri and Nusantara Infrastructure.

Diversification Opportunities for Kawasan Industri and Nusantara Infrastructure

0.0

Correlation Coefficient

Kawasan Industri  Nusantara Infrastructure

Pay attention - limited upside

The 3 months correlation between Kawasan and Nusantara is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Kawasan Industri Jababeka and Nusantara Infrastructure Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nusantara Infrastructure and Kawasan Industri 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 Kawasan Industri Jababeka are associated (or correlated) with Nusantara Infrastructure. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nusantara Infrastructure has no effect on the direction of Kawasan Industri i.e., Kawasan Industri and Nusantara Infrastructure go up and down completely randomly.

Pair Corralation between Kawasan Industri and Nusantara Infrastructure

If you would invest  19,400  in Kawasan Industri Jababeka on September 1, 2024 and sell it today you would earn a total of  100.00  from holding Kawasan Industri Jababeka or generate 0.52% return on investment over 90 days.

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

Kawasan Industri Jababeka  vs.  Nusantara Infrastructure Tbk

Kawasan Industri Jababeka

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Kawasan Industri Jababeka are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Kawasan Industri disclosed solid returns over the last few months and may actually be approaching a breakup point.

Nusantara Infrastructure

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nusantara Infrastructure Tbk has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent forward-looking signals, Nusantara Infrastructure 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 Kawasan Industri and Nusantara Infrastructure

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

The idea behind Kawasan Industri Jababeka and Nusantara Infrastructure 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.