Correlation Between NFC Indonesia and Pembangunan Graha

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

Diversification Opportunities for NFC Indonesia and Pembangunan Graha

-0.56

Correlation Coefficient

NFC Indonesia  Pembangunan Graha

Excellent diversification

The 3 months correlation between NFC and Pembangunan is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding NFC Indonesia PT and Pembangunan Graha Lestari in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pembangunan Graha Lestari 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 Pembangunan Graha. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pembangunan Graha Lestari has no effect on the direction of NFC Indonesia i.e., NFC Indonesia and Pembangunan Graha go up and down completely randomly.

Pair Corralation between NFC Indonesia and Pembangunan Graha

Assuming the 90 days trading horizon NFC Indonesia PT is expected to under-perform the Pembangunan Graha. But the stock apears to be less risky and, when comparing its historical volatility, NFC Indonesia PT is 1.6 times less risky than Pembangunan Graha. The stock trades about -0.15 of its potential returns per unit of risk. The Pembangunan Graha Lestari is currently generating about -0.08 of returns per unit of risk over similar time horizon. If you would invest  16,400  in Pembangunan Graha Lestari on December 4, 2024 and sell it today you would lose (1,700) from holding Pembangunan Graha Lestari or give up 10.37% of portfolio value over 90 days.

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

NFC Indonesia PT  vs.  Pembangunan Graha Lestari

NFC Indonesia PT

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in NFC Indonesia PT are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, NFC Indonesia disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pembangunan Graha Lestari

Risk-Adjusted Performance

Very Weak

Over the last 90 days Pembangunan Graha Lestari 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.

Pair Trading with NFC Indonesia and Pembangunan Graha

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

The idea behind NFC Indonesia PT and Pembangunan Graha Lestari 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.