Correlation Between Kirana Megatara and Nusa Raya
Can any of the company-specific risk be diversified away by investing in both Kirana Megatara and Nusa Raya 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 Kirana Megatara and Nusa Raya into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kirana Megatara Tbk and Nusa Raya Cipta, you can compare the effects of market volatilities on Kirana Megatara and Nusa Raya 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 Kirana Megatara with a short position of Nusa Raya. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kirana Megatara and Nusa Raya.
Diversification Opportunities for Kirana Megatara and Nusa Raya
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Kirana and Nusa is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Kirana Megatara Tbk and Nusa Raya Cipta in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nusa Raya Cipta and Kirana Megatara 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 Kirana Megatara Tbk are associated (or correlated) with Nusa Raya. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nusa Raya Cipta has no effect on the direction of Kirana Megatara i.e., Kirana Megatara and Nusa Raya go up and down completely randomly.
Pair Corralation between Kirana Megatara and Nusa Raya
Assuming the 90 days trading horizon Kirana Megatara Tbk is expected to generate 2.65 times more return on investment than Nusa Raya. However, Kirana Megatara is 2.65 times more volatile than Nusa Raya Cipta. It trades about 0.03 of its potential returns per unit of risk. Nusa Raya Cipta is currently generating about 0.04 per unit of risk. If you would invest 29,600 in Kirana Megatara Tbk on August 25, 2024 and sell it today you would earn a total of 3,400 from holding Kirana Megatara Tbk or generate 11.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kirana Megatara Tbk vs. Nusa Raya Cipta
Performance |
| Timeline |
| Kirana Megatara Tbk |
| Nusa Raya Cipta |
Kirana Megatara and Nusa Raya Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kirana Megatara and Nusa Raya
The main advantage of trading using opposite Kirana Megatara and Nusa Raya positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kirana Megatara position performs unexpectedly, Nusa Raya 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 Raya will offset losses from the drop in Nusa Raya's long position.| Kirana Megatara vs. Emdeki Utama Tbk | Kirana Megatara vs. Panca Budi Idaman | Kirana Megatara vs. Mark Dynamics Indonesia | Kirana Megatara vs. Map Boga Adiperkasa |
| Nusa Raya vs. Total Bangun Persada | Nusa Raya vs. Surya Semesta Internusa | Nusa Raya vs. Acset Indonusa Tbk | Nusa Raya vs. Mitra Pinasthika Mustika |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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