Correlation Between Indo Acidatama and Bank Nationalnobu

Can any of the company-specific risk be diversified away by investing in both Indo Acidatama and Bank Nationalnobu 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 Indo Acidatama and Bank Nationalnobu into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Indo Acidatama Tbk and Bank Nationalnobu Tbk, you can compare the effects of market volatilities on Indo Acidatama and Bank Nationalnobu 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 Indo Acidatama with a short position of Bank Nationalnobu. Check out your portfolio center. Please also check ongoing floating volatility patterns of Indo Acidatama and Bank Nationalnobu.

Diversification Opportunities for Indo Acidatama and Bank Nationalnobu

0.0

Correlation Coefficient

Indo Acidatama  Bank Nationalnobu

Pay attention - limited upside

The 3 months correlation between Indo and Bank is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Indo Acidatama Tbk and Bank Nationalnobu Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bank Nationalnobu Tbk and Indo Acidatama 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 Indo Acidatama Tbk are associated (or correlated) with Bank Nationalnobu. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bank Nationalnobu Tbk has no effect on the direction of Indo Acidatama i.e., Indo Acidatama and Bank Nationalnobu go up and down completely randomly.

Pair Corralation between Indo Acidatama and Bank Nationalnobu

Assuming the 90 days trading horizon Indo Acidatama is expected to generate 3.5 times less return on investment than Bank Nationalnobu. But when comparing it to its historical volatility, Indo Acidatama Tbk is 1.8 times less risky than Bank Nationalnobu. It trades about 0.01 of its potential returns per unit of risk. Bank Nationalnobu Tbk is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  49,600  in Bank Nationalnobu Tbk on December 2, 2024 and sell it today you would earn a total of  8,900  from holding Bank Nationalnobu Tbk or generate 17.94% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	99.79%
Values	Daily Returns

Indo Acidatama Tbk  vs.  Bank Nationalnobu Tbk

Indo Acidatama Tbk

Risk-Adjusted Performance

Very Weak

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

Bank Nationalnobu Tbk

Risk-Adjusted Performance

Very Weak

Over the last 90 days Bank Nationalnobu Tbk has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent forward-looking signals, Bank Nationalnobu 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 Indo Acidatama and Bank Nationalnobu

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

The idea behind Indo Acidatama Tbk and Bank Nationalnobu Tbk 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.

Check out your portfolio center.

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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.