Correlation Between Nanotech Indonesia and Megapolitan Developments
Can any of the company-specific risk be diversified away by investing in both Nanotech Indonesia and Megapolitan Developments 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 Nanotech Indonesia and Megapolitan Developments into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nanotech Indonesia Global and Megapolitan Developments Tbk, you can compare the effects of market volatilities on Nanotech Indonesia and Megapolitan Developments 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 Nanotech Indonesia with a short position of Megapolitan Developments. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nanotech Indonesia and Megapolitan Developments.
Diversification Opportunities for Nanotech Indonesia and Megapolitan Developments
-0.58 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Nanotech and Megapolitan is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Nanotech Indonesia Global and Megapolitan Developments Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Megapolitan Developments and Nanotech Indonesia 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 Nanotech Indonesia Global are associated (or correlated) with Megapolitan Developments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Megapolitan Developments has no effect on the direction of Nanotech Indonesia i.e., Nanotech Indonesia and Megapolitan Developments go up and down completely randomly.
Pair Corralation between Nanotech Indonesia and Megapolitan Developments
Assuming the 90 days trading horizon Nanotech Indonesia is expected to generate 4.3 times less return on investment than Megapolitan Developments. But when comparing it to its historical volatility, Nanotech Indonesia Global is 1.48 times less risky than Megapolitan Developments. It trades about 0.01 of its potential returns per unit of risk. Megapolitan Developments Tbk is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 12,500 in Megapolitan Developments Tbk on September 2, 2024 and sell it today you would lose (400.00) from holding Megapolitan Developments Tbk or give up 3.2% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nanotech Indonesia Global vs. Megapolitan Developments Tbk
Performance |
| Timeline |
| Nanotech Indonesia Global |
| Megapolitan Developments |
Nanotech Indonesia and Megapolitan Developments Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nanotech Indonesia and Megapolitan Developments
The main advantage of trading using opposite Nanotech Indonesia and Megapolitan Developments positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nanotech Indonesia position performs unexpectedly, Megapolitan Developments 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 Megapolitan Developments will offset losses from the drop in Megapolitan Developments' long position.| Nanotech Indonesia vs. Sumber Tani Agung | Nanotech Indonesia vs. Dayamitra Telekomunikasi PT | Nanotech Indonesia vs. Wahana Inti MakmurTbk | Nanotech Indonesia vs. Wir Asia 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
Other Complementary Tools
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments | |
| Cryptocurrency Center Build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency | |
| Latest Portfolios Quick portfolio dashboard that showcases your latest portfolios | |
| Portfolio Dashboard Portfolio dashboard that provides centralized access to all your investments | |
| Premium Stories Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope |