Correlation Between Matahari Putra and Austindo Nusantara

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

By analyzing existing cross correlation between Matahari Putra Prima and Austindo Nusantara Jaya, you can compare the effects of market volatilities on Matahari Putra and Austindo 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 Matahari Putra with a short position of Austindo Nusantara. Check out your portfolio center. Please also check ongoing floating volatility patterns of Matahari Putra and Austindo Nusantara.

Diversification Opportunities for Matahari Putra and Austindo Nusantara

-0.36

Correlation Coefficient

Matahari Putra  Austindo Nusantara

Very good diversification

The 3 months correlation between Matahari and Austindo is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Matahari Putra Prima and Austindo Nusantara Jaya in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Austindo Nusantara Jaya and Matahari Putra 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 Matahari Putra Prima are associated (or correlated) with Austindo Nusantara. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Austindo Nusantara Jaya has no effect on the direction of Matahari Putra i.e., Matahari Putra and Austindo Nusantara go up and down completely randomly.

Pair Corralation between Matahari Putra and Austindo Nusantara

Assuming the 90 days trading horizon Matahari Putra Prima is expected to under-perform the Austindo Nusantara. In addition to that, Matahari Putra is 2.03 times more volatile than Austindo Nusantara Jaya. It trades about -0.03 of its total potential returns per unit of risk. Austindo Nusantara Jaya is currently generating about 0.18 per unit of volatility. If you would invest  74,000  in Austindo Nusantara Jaya on December 3, 2024 and sell it today you would earn a total of  17,000  from holding Austindo Nusantara Jaya or generate 22.97% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.31%
Values	Daily Returns

Matahari Putra Prima  vs.  Austindo Nusantara Jaya

Matahari Putra Prima

Risk-Adjusted Performance

Very Weak

Over the last 90 days Matahari Putra Prima 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.

Austindo Nusantara Jaya

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Austindo Nusantara Jaya are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Austindo Nusantara disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Matahari Putra and Austindo Nusantara

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

The idea behind Matahari Putra Prima and Austindo Nusantara Jaya 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.