Correlation Between Ace Oldfields and Nanotech Indonesia
Can any of the company-specific risk be diversified away by investing in both Ace Oldfields and Nanotech Indonesia 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 Ace Oldfields and Nanotech Indonesia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ace Oldfields PT and Nanotech Indonesia Global, you can compare the effects of market volatilities on Ace Oldfields and Nanotech Indonesia 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 Ace Oldfields with a short position of Nanotech Indonesia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ace Oldfields and Nanotech Indonesia.
Diversification Opportunities for Ace Oldfields and Nanotech Indonesia
-0.24 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Ace and Nanotech is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Ace Oldfields PT and Nanotech Indonesia Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nanotech Indonesia Global and Ace Oldfields 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 Ace Oldfields PT are associated (or correlated) with Nanotech Indonesia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nanotech Indonesia Global has no effect on the direction of Ace Oldfields i.e., Ace Oldfields and Nanotech Indonesia go up and down completely randomly.
Pair Corralation between Ace Oldfields and Nanotech Indonesia
Assuming the 90 days trading horizon Ace Oldfields is expected to generate 45.02 times less return on investment than Nanotech Indonesia. But when comparing it to its historical volatility, Ace Oldfields PT is 2.97 times less risky than Nanotech Indonesia. It trades about 0.01 of its potential returns per unit of risk. Nanotech Indonesia Global is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 1,400 in Nanotech Indonesia Global on September 1, 2024 and sell it today you would earn a total of 700.00 from holding Nanotech Indonesia Global or generate 50.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ace Oldfields PT vs. Nanotech Indonesia Global
Performance |
| Timeline |
| Ace Oldfields PT |
| Nanotech Indonesia Global |
Ace Oldfields and Nanotech Indonesia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ace Oldfields and Nanotech Indonesia
The main advantage of trading using opposite Ace Oldfields and Nanotech Indonesia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ace Oldfields position performs unexpectedly, Nanotech Indonesia 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 Nanotech Indonesia will offset losses from the drop in Nanotech Indonesia's long position.| Ace Oldfields vs. Ladangbaja Murni PT | Ace Oldfields vs. PT Hasnur Internasional | Ace Oldfields vs. Geoprima Solusi Tbk | Ace Oldfields vs. Prima Andalan Mandiri |
| Nanotech Indonesia vs. Sumber Tani Agung | Nanotech Indonesia vs. Wahana Inti MakmurTbk | Nanotech Indonesia vs. Integra Indocabinet Tbk | Nanotech Indonesia vs. Multistrada Arah Sarana |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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