Correlation Between Bank Central and Nusa Konstruksi
Can any of the company-specific risk be diversified away by investing in both Bank Central and Nusa Konstruksi 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 Bank Central and Nusa Konstruksi into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bank Central Asia and Nusa Konstruksi Enjiniring, you can compare the effects of market volatilities on Bank Central and Nusa Konstruksi 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 Bank Central with a short position of Nusa Konstruksi. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank Central and Nusa Konstruksi.
Diversification Opportunities for Bank Central and Nusa Konstruksi
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Bank and Nusa is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Bank Central Asia and Nusa Konstruksi Enjiniring in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nusa Konstruksi Enji and Bank Central 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 Bank Central Asia are associated (or correlated) with Nusa Konstruksi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nusa Konstruksi Enji has no effect on the direction of Bank Central i.e., Bank Central and Nusa Konstruksi go up and down completely randomly.
Pair Corralation between Bank Central and Nusa Konstruksi
Assuming the 90 days trading horizon Bank Central Asia is expected to generate 1.23 times more return on investment than Nusa Konstruksi. However, Bank Central is 1.23 times more volatile than Nusa Konstruksi Enjiniring. It trades about -0.02 of its potential returns per unit of risk. Nusa Konstruksi Enjiniring is currently generating about -0.03 per unit of risk. If you would invest 1,022,401 in Bank Central Asia on September 2, 2024 and sell it today you would lose (22,401) from holding Bank Central Asia or give up 2.19% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bank Central Asia vs. Nusa Konstruksi Enjiniring
Performance |
| Timeline |
| Bank Central Asia |
| Nusa Konstruksi Enji |
Bank Central and Nusa Konstruksi Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank Central and Nusa Konstruksi
The main advantage of trading using opposite Bank Central and Nusa Konstruksi positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank Central position performs unexpectedly, Nusa Konstruksi 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 Nusa Konstruksi will offset losses from the drop in Nusa Konstruksi's long position.| Bank Central vs. Ace Hardware Indonesia | Bank Central vs. Merdeka Copper Gold | Bank Central vs. Mitra Pinasthika Mustika | Bank Central vs. Jakarta Int Hotels |
| Nusa Konstruksi vs. Matahari Department Store | Nusa Konstruksi vs. Multi Medika Internasional | Nusa Konstruksi vs. Visi Media Asia | Nusa Konstruksi vs. Bayan Resources Tbk |
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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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