Correlation Between Nusa Raya and Paramita Bangun

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

Diversification Opportunities for Nusa Raya and Paramita Bangun

-0.67

Correlation Coefficient

Nusa Raya  Paramita Bangun

Excellent diversification

The 3 months correlation between Nusa and Paramita is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Nusa Raya Cipta and Paramita Bangun Sarana in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Paramita Bangun Sarana 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 Paramita Bangun. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Paramita Bangun Sarana has no effect on the direction of Nusa Raya i.e., Nusa Raya and Paramita Bangun go up and down completely randomly.

Pair Corralation between Nusa Raya and Paramita Bangun

Assuming the 90 days trading horizon Nusa Raya Cipta is expected to generate 0.66 times more return on investment than Paramita Bangun. However, Nusa Raya Cipta is 1.52 times less risky than Paramita Bangun. It trades about 0.0 of its potential returns per unit of risk. Paramita Bangun Sarana is currently generating about -0.14 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 Against
Strength	Weak
Accuracy	95.0%
Values	Daily Returns

Nusa Raya Cipta  vs.  Paramita Bangun Sarana

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.

Paramita Bangun Sarana

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Paramita Bangun Sarana are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Paramita Bangun disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Nusa Raya and Paramita Bangun

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

The idea behind Nusa Raya Cipta and Paramita Bangun Sarana 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.