Correlation Between Link Net and Media Nusantara

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

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

Diversification Opportunities for Link Net and Media Nusantara

0.42

Correlation Coefficient

Link Net  Media Nusantara

Very weak diversification

The 3 months correlation between Link and Media is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Link Net Tbk and Media Nusantara Citra in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Media Nusantara Citra and Link Net 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 Link Net Tbk are associated (or correlated) with Media Nusantara. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Media Nusantara Citra has no effect on the direction of Link Net i.e., Link Net and Media Nusantara go up and down completely randomly.

Pair Corralation between Link Net and Media Nusantara

Assuming the 90 days trading horizon Link Net Tbk is expected to generate 2.09 times more return on investment than Media Nusantara. However, Link Net is 2.09 times more volatile than Media Nusantara Citra. It trades about 0.18 of its potential returns per unit of risk. Media Nusantara Citra is currently generating about 0.01 per unit of risk. If you would invest  120,000  in Link Net Tbk on September 12, 2024 and sell it today you would earn a total of  12,000  from holding Link Net Tbk or generate 10.0% return on investment over 90 days.

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

Link Net Tbk  vs.  Media Nusantara Citra

Link Net Tbk

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Link Net Tbk 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.

Media Nusantara Citra

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Media Nusantara Citra has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent forward-looking signals, Media 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 Link Net and Media Nusantara

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

The idea behind Link Net Tbk and Media Nusantara Citra 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..