Correlation Between Nova Eye and Aneka Tambang
Can any of the company-specific risk be diversified away by investing in both Nova Eye and Aneka Tambang 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 Nova Eye and Aneka Tambang into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nova Eye Medical and Aneka Tambang Tbk, you can compare the effects of market volatilities on Nova Eye and Aneka Tambang 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 Nova Eye with a short position of Aneka Tambang. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nova Eye and Aneka Tambang.
Diversification Opportunities for Nova Eye and Aneka Tambang
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Nova and Aneka is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Nova Eye Medical and Aneka Tambang Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aneka Tambang Tbk and Nova Eye 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 Nova Eye Medical are associated (or correlated) with Aneka Tambang. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aneka Tambang Tbk has no effect on the direction of Nova Eye i.e., Nova Eye and Aneka Tambang go up and down completely randomly.
Pair Corralation between Nova Eye and Aneka Tambang
Assuming the 90 days trading horizon Nova Eye Medical is expected to under-perform the Aneka Tambang. In addition to that, Nova Eye is 2.62 times more volatile than Aneka Tambang Tbk. It trades about -0.11 of its total potential returns per unit of risk. Aneka Tambang Tbk is currently generating about -0.1 per unit of volatility. If you would invest 91.00 in Aneka Tambang Tbk on August 28, 2024 and sell it today you would lose (5.00) from holding Aneka Tambang Tbk or give up 5.49% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nova Eye Medical vs. Aneka Tambang Tbk
Performance |
| Timeline |
| Nova Eye Medical |
| Aneka Tambang Tbk |
Nova Eye and Aneka Tambang Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nova Eye and Aneka Tambang
The main advantage of trading using opposite Nova Eye and Aneka Tambang positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nova Eye position performs unexpectedly, Aneka Tambang 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 Aneka Tambang will offset losses from the drop in Aneka Tambang's long position.The idea behind Nova Eye Medical and Aneka Tambang 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.| Aneka Tambang vs. Hawsons Iron | Aneka Tambang vs. Carlton Investments | Aneka Tambang vs. MFF Capital Investments | Aneka Tambang vs. Mount Gibson Iron |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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