Correlation Between Nusantara Infrastructure and Mandala Multifinance

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

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

Diversification Opportunities for Nusantara Infrastructure and Mandala Multifinance

0.0

Correlation Coefficient

Nusantara Infrastructure  Mandala Multifinance

Pay attention - limited upside

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

Pair Corralation between Nusantara Infrastructure and Mandala Multifinance

If you would invest  165,263  in Mandala Multifinance Tbk on September 12, 2024 and sell it today you would earn a total of  169,737  from holding Mandala Multifinance Tbk or generate 102.71% return on investment over 90 days.

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

Nusantara Infrastructure Tbk  vs.  Mandala Multifinance Tbk

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.

Mandala Multifinance Tbk

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Mandala Multifinance Tbk are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Mandala Multifinance disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Nusantara Infrastructure and Mandala Multifinance

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

The idea behind Nusantara Infrastructure Tbk and Mandala Multifinance 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.

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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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.