Correlation Between Nusa Palapa and Lima Dua

Can any of the company-specific risk be diversified away by investing in both Nusa Palapa and Lima Dua 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 Nusa Palapa and Lima Dua into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Nusa Palapa Gemilang and Lima Dua Lima, you can compare the effects of market volatilities on Nusa Palapa and Lima Dua 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 Nusa Palapa with a short position of Lima Dua. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nusa Palapa and Lima Dua.

Diversification Opportunities for Nusa Palapa and Lima Dua

0.68

Correlation Coefficient

Nusa Palapa  Lima Dua

Poor diversification

The 3 months correlation between Nusa and Lima is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Nusa Palapa Gemilang and Lima Dua Lima in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lima Dua Lima and Nusa Palapa 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 Nusa Palapa Gemilang are associated (or correlated) with Lima Dua. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lima Dua Lima has no effect on the direction of Nusa Palapa i.e., Nusa Palapa and Lima Dua go up and down completely randomly.

Pair Corralation between Nusa Palapa and Lima Dua

Assuming the 90 days trading horizon Nusa Palapa Gemilang is expected to generate 0.6 times more return on investment than Lima Dua. However, Nusa Palapa Gemilang is 1.66 times less risky than Lima Dua. It trades about -0.01 of its potential returns per unit of risk. Lima Dua Lima is currently generating about -0.08 per unit of risk. If you would invest  3,200  in Nusa Palapa Gemilang on December 28, 2024 and sell it today you would lose (100.00) from holding Nusa Palapa Gemilang or give up 3.12% of portfolio value over 90 days.

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

Nusa Palapa Gemilang  vs.  Lima Dua Lima

Nusa Palapa Gemilang

Risk-Adjusted Performance

Very Weak

Over the last 90 days Nusa Palapa Gemilang has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent forward-looking signals, Nusa Palapa is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Lima Dua Lima

Risk-Adjusted Performance

Very Weak

Over the last 90 days Lima Dua Lima 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 Nusa Palapa and Lima Dua

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

The idea behind Nusa Palapa Gemilang and Lima Dua Lima 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.