Correlation Between Intanwijaya Internasional and Nusa Konstruksi
Can any of the company-specific risk be diversified away by investing in both Intanwijaya Internasional 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 Intanwijaya Internasional and Nusa Konstruksi into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Intanwijaya Internasional Tbk and Nusa Konstruksi Enjiniring, you can compare the effects of market volatilities on Intanwijaya Internasional 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 Intanwijaya Internasional with a short position of Nusa Konstruksi. Check out your portfolio center. Please also check ongoing floating volatility patterns of Intanwijaya Internasional and Nusa Konstruksi.
Diversification Opportunities for Intanwijaya Internasional and Nusa Konstruksi
0.28 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Intanwijaya and Nusa is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Intanwijaya Internasional Tbk 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 Intanwijaya Internasional 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 Intanwijaya Internasional Tbk 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 Intanwijaya Internasional i.e., Intanwijaya Internasional and Nusa Konstruksi go up and down completely randomly.
Pair Corralation between Intanwijaya Internasional and Nusa Konstruksi
Assuming the 90 days trading horizon Intanwijaya Internasional Tbk is expected to generate 1.93 times more return on investment than Nusa Konstruksi. However, Intanwijaya Internasional is 1.93 times more volatile than Nusa Konstruksi Enjiniring. It trades about -0.1 of its potential returns per unit of risk. Nusa Konstruksi Enjiniring is currently generating about -0.21 per unit of risk. If you would invest 60,000 in Intanwijaya Internasional Tbk on September 5, 2024 and sell it today you would lose (2,000) from holding Intanwijaya Internasional Tbk or give up 3.33% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Intanwijaya Internasional Tbk vs. Nusa Konstruksi Enjiniring
Performance |
| Timeline |
| Intanwijaya Internasional |
| Nusa Konstruksi Enji |
Intanwijaya Internasional and Nusa Konstruksi Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Intanwijaya Internasional and Nusa Konstruksi
The main advantage of trading using opposite Intanwijaya Internasional and Nusa Konstruksi positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Intanwijaya Internasional 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.The idea behind Intanwijaya Internasional Tbk and Nusa Konstruksi Enjiniring 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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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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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