Correlation Between NFC Indonesia and Kioson Komersial

Can any of the company-specific risk be diversified away by investing in both NFC Indonesia and Kioson Komersial 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 Kioson Komersial 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 Kioson Komersial Indonesia, you can compare the effects of market volatilities on NFC Indonesia and Kioson Komersial 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 Kioson Komersial. Check out your portfolio center. Please also check ongoing floating volatility patterns of NFC Indonesia and Kioson Komersial.

Diversification Opportunities for NFC Indonesia and Kioson Komersial

-0.28

Correlation Coefficient

NFC Indonesia  Kioson Komersial

Very good diversification

The 3 months correlation between NFC and Kioson is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding NFC Indonesia PT and Kioson Komersial Indonesia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kioson Komersial Ind 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 Kioson Komersial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kioson Komersial Ind has no effect on the direction of NFC Indonesia i.e., NFC Indonesia and Kioson Komersial go up and down completely randomly.

Pair Corralation between NFC Indonesia and Kioson Komersial

Assuming the 90 days trading horizon NFC Indonesia PT is expected to generate 15.91 times more return on investment than Kioson Komersial. However, NFC Indonesia is 15.91 times more volatile than Kioson Komersial Indonesia. It trades about 0.1 of its potential returns per unit of risk. Kioson Komersial Indonesia is currently generating about -0.22 per unit of risk. If you would invest  106,000  in NFC Indonesia PT on September 1, 2024 and sell it today you would earn a total of  11,500  from holding NFC Indonesia PT or generate 10.85% return on investment over 90 days.

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

NFC Indonesia PT  vs.  Kioson Komersial Indonesia

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.

Kioson Komersial Ind

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Kioson Komersial Indonesia are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent forward-looking signals, Kioson Komersial 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 NFC Indonesia and Kioson Komersial

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

The idea behind NFC Indonesia PT and Kioson Komersial Indonesia 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.