Correlation Between Nusa Raya and Indonesia Pondasi

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

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

Diversification Opportunities for Nusa Raya and Indonesia Pondasi

0.9

Correlation Coefficient

Nusa Raya  Indonesia Pondasi

Almost no diversification

The 3 months correlation between Nusa and Indonesia is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Nusa Raya Cipta and Indonesia Pondasi Raya in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Indonesia Pondasi Raya and Nusa Raya 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 Raya Cipta are associated (or correlated) with Indonesia Pondasi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Indonesia Pondasi Raya has no effect on the direction of Nusa Raya i.e., Nusa Raya and Indonesia Pondasi go up and down completely randomly.

Pair Corralation between Nusa Raya and Indonesia Pondasi

Assuming the 90 days trading horizon Nusa Raya Cipta is expected to generate 0.28 times more return on investment than Indonesia Pondasi. However, Nusa Raya Cipta is 3.56 times less risky than Indonesia Pondasi. It trades about 0.0 of its potential returns per unit of risk. Indonesia Pondasi Raya is currently generating about -0.06 per unit of risk. If you would invest  34,600  in Nusa Raya Cipta on October 27, 2024 and sell it today you would earn a total of  0.00  from holding Nusa Raya Cipta or generate 0.0% return on investment over 90 days.

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

Nusa Raya Cipta  vs.  Indonesia Pondasi Raya

Nusa Raya Cipta

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nusa Raya Cipta 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 February 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Indonesia Pondasi Raya

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Indonesia Pondasi Raya 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 February 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Nusa Raya and Indonesia Pondasi

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

The idea behind Nusa Raya Cipta and Indonesia Pondasi Raya 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.