Correlation Between PT Hanjaya and Nicholas Financial

Can any of the company-specific risk be diversified away by investing in both PT Hanjaya and Nicholas Financial 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 PT Hanjaya and Nicholas Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between PT Hanjaya Mandala and Nicholas Financial, you can compare the effects of market volatilities on PT Hanjaya and Nicholas Financial 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 PT Hanjaya with a short position of Nicholas Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of PT Hanjaya and Nicholas Financial.

Diversification Opportunities for PT Hanjaya and Nicholas Financial

-0.5

Correlation Coefficient

PT Hanjaya  Nicholas Financial

Very good diversification

The 3 months correlation between PHJMF and Nicholas is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding PT Hanjaya Mandala and Nicholas Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nicholas Financial and PT Hanjaya 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 PT Hanjaya Mandala are associated (or correlated) with Nicholas Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nicholas Financial has no effect on the direction of PT Hanjaya i.e., PT Hanjaya and Nicholas Financial go up and down completely randomly.

Pair Corralation between PT Hanjaya and Nicholas Financial

Assuming the 90 days horizon PT Hanjaya Mandala is expected to generate 4.59 times more return on investment than Nicholas Financial. However, PT Hanjaya is 4.59 times more volatile than Nicholas Financial. It trades about 0.04 of its potential returns per unit of risk. Nicholas Financial is currently generating about -0.01 per unit of risk. If you would invest  5.04  in PT Hanjaya Mandala on September 4, 2024 and sell it today you would lose (0.99) from holding PT Hanjaya Mandala or give up 19.64% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	94.81%
Values	Daily Returns

PT Hanjaya Mandala  vs.  Nicholas Financial

PT Hanjaya Mandala

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in PT Hanjaya Mandala are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak primary indicators, PT Hanjaya may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Nicholas Financial

Risk-Adjusted Performance

0 of 100

OK

Over the last 90 days Nicholas Financial has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite unfluctuating fundamental indicators, Nicholas Financial disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with PT Hanjaya and Nicholas Financial

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

The idea behind PT Hanjaya Mandala and Nicholas Financial 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..