Correlation Between NFC Indonesia and Nusantara Voucher

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

By analyzing existing cross correlation between NFC Indonesia PT and Nusantara Voucher Distribution, you can compare the effects of market volatilities on NFC Indonesia and Nusantara Voucher 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 NFC Indonesia with a short position of Nusantara Voucher. Check out your portfolio center. Please also check ongoing floating volatility patterns of NFC Indonesia and Nusantara Voucher.

Diversification Opportunities for NFC Indonesia and Nusantara Voucher

-0.06

Correlation Coefficient

NFC Indonesia  Nusantara Voucher

Good diversification

The 3 months correlation between NFC and Nusantara is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding NFC Indonesia PT and Nusantara Voucher Distribution in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nusantara Voucher and NFC Indonesia 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 NFC Indonesia PT are associated (or correlated) with Nusantara Voucher. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nusantara Voucher has no effect on the direction of NFC Indonesia i.e., NFC Indonesia and Nusantara Voucher go up and down completely randomly.

Pair Corralation between NFC Indonesia and Nusantara Voucher

Assuming the 90 days trading horizon NFC Indonesia is expected to generate 6.31 times less return on investment than Nusantara Voucher. But when comparing it to its historical volatility, NFC Indonesia PT is 1.28 times less risky than Nusantara Voucher. It trades about 0.02 of its potential returns per unit of risk. Nusantara Voucher Distribution is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  9,800  in Nusantara Voucher Distribution on September 1, 2024 and sell it today you would earn a total of  7,300  from holding Nusantara Voucher Distribution or generate 74.49% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.21%
Values	Daily Returns

NFC Indonesia PT  vs.  Nusantara Voucher Distribution

NFC Indonesia PT

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days NFC Indonesia PT 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 December 2024. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Nusantara Voucher

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Nusantara Voucher Distribution are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Nusantara Voucher disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with NFC Indonesia and Nusantara Voucher

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

The idea behind NFC Indonesia PT and Nusantara Voucher Distribution 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.