Correlation Between Nusantara Almazia and Optima Prima

Can any of the company-specific risk be diversified away by investing in both Nusantara Almazia and Optima Prima 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 Nusantara Almazia and Optima Prima into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Nusantara Almazia and Optima Prima Metal, you can compare the effects of market volatilities on Nusantara Almazia and Optima Prima 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 Nusantara Almazia with a short position of Optima Prima. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nusantara Almazia and Optima Prima.

Diversification Opportunities for Nusantara Almazia and Optima Prima

0.02

Correlation Coefficient

Nusantara Almazia  Optima Prima

Significant diversification

The 3 months correlation between Nusantara and Optima is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Nusantara Almazia and Optima Prima Metal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Optima Prima Metal and Nusantara Almazia 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 Nusantara Almazia are associated (or correlated) with Optima Prima. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Optima Prima Metal has no effect on the direction of Nusantara Almazia i.e., Nusantara Almazia and Optima Prima go up and down completely randomly.

Pair Corralation between Nusantara Almazia and Optima Prima

Assuming the 90 days trading horizon Nusantara Almazia is expected to under-perform the Optima Prima. In addition to that, Nusantara Almazia is 5.72 times more volatile than Optima Prima Metal. It trades about -0.04 of its total potential returns per unit of risk. Optima Prima Metal is currently generating about -0.11 per unit of volatility. If you would invest  5,200  in Optima Prima Metal on December 2, 2024 and sell it today you would lose (200.00) from holding Optima Prima Metal or give up 3.85% of portfolio value over 90 days.

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

Nusantara Almazia  vs.  Optima Prima Metal

Nusantara Almazia

Risk-Adjusted Performance

Very Weak

Over the last 90 days Nusantara Almazia has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's forward-looking signals remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Optima Prima Metal

Risk-Adjusted Performance

Very Weak

Over the last 90 days Optima Prima Metal has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent forward-looking signals, Optima Prima 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 Nusantara Almazia and Optima Prima

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

The idea behind Nusantara Almazia and Optima Prima Metal 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.