Correlation Between Lima Dua and Nusa Palapa

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

By analyzing existing cross correlation between Lima Dua Lima and Nusa Palapa Gemilang, you can compare the effects of market volatilities on Lima Dua and Nusa Palapa 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 Lima Dua with a short position of Nusa Palapa. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lima Dua and Nusa Palapa.

Diversification Opportunities for Lima Dua and Nusa Palapa

0.68

Correlation Coefficient

Lima Dua  Nusa Palapa

Poor diversification

The 3 months correlation between Lima and Nusa is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Lima Dua Lima and Nusa Palapa Gemilang in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nusa Palapa Gemilang and Lima Dua 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 Lima Dua Lima are associated (or correlated) with Nusa Palapa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nusa Palapa Gemilang has no effect on the direction of Lima Dua i.e., Lima Dua and Nusa Palapa go up and down completely randomly.

Pair Corralation between Lima Dua and Nusa Palapa

Assuming the 90 days trading horizon Lima Dua Lima is expected to under-perform the Nusa Palapa. In addition to that, Lima Dua is 1.66 times more volatile than Nusa Palapa Gemilang. It trades about -0.08 of its total potential returns per unit of risk. Nusa Palapa Gemilang is currently generating about -0.01 per unit of volatility. If you would invest  3,200  in Nusa Palapa Gemilang on December 28, 2024 and sell it today you would lose (100.00) from holding Nusa Palapa Gemilang or give up 3.12% of portfolio value over 90 days.

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

Lima Dua Lima  vs.  Nusa Palapa Gemilang

Lima Dua Lima

Risk-Adjusted Performance

Very Weak

Over the last 90 days Lima Dua Lima 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 April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Nusa Palapa Gemilang

Risk-Adjusted Performance

Very Weak

Over the last 90 days Nusa Palapa Gemilang has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent forward-looking signals, Nusa Palapa 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 Lima Dua and Nusa Palapa

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

The idea behind Lima Dua Lima and Nusa Palapa Gemilang 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.