Correlation Between NFC Indonesia and Charnic Capital
Can any of the company-specific risk be diversified away by investing in both NFC Indonesia and Charnic Capital 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 NFC Indonesia and Charnic Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NFC Indonesia PT and Charnic Capital Tbk, you can compare the effects of market volatilities on NFC Indonesia and Charnic Capital 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 NFC Indonesia with a short position of Charnic Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of NFC Indonesia and Charnic Capital.
Diversification Opportunities for NFC Indonesia and Charnic Capital
-0.71 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between NFC and Charnic is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding NFC Indonesia PT and Charnic Capital Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Charnic Capital Tbk and NFC 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 NFC Indonesia PT are associated (or correlated) with Charnic Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Charnic Capital Tbk has no effect on the direction of NFC Indonesia i.e., NFC Indonesia and Charnic Capital go up and down completely randomly.
Pair Corralation between NFC Indonesia and Charnic Capital
Assuming the 90 days trading horizon NFC Indonesia PT is expected to under-perform the Charnic Capital. In addition to that, NFC Indonesia is 1.2 times more volatile than Charnic Capital Tbk. It trades about -0.06 of its total potential returns per unit of risk. Charnic Capital Tbk is currently generating about 0.09 per unit of volatility. If you would invest 17,800 in Charnic Capital Tbk on September 3, 2024 and sell it today you would earn a total of 53,200 from holding Charnic Capital Tbk or generate 298.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
NFC Indonesia PT vs. Charnic Capital Tbk
Performance |
| Timeline |
| NFC Indonesia PT |
| Charnic Capital Tbk |
NFC Indonesia and Charnic Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NFC Indonesia and Charnic Capital
The main advantage of trading using opposite NFC Indonesia and Charnic Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NFC Indonesia position performs unexpectedly, Charnic Capital 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 Charnic Capital will offset losses from the drop in Charnic Capital's long position.| NFC Indonesia vs. Mitra Pinasthika Mustika | NFC Indonesia vs. Jakarta Int Hotels | NFC Indonesia vs. Asuransi Harta Aman | NFC Indonesia vs. Indosterling Technomedia Tbk |
| Charnic Capital vs. Royal Prima PT | Charnic Capital vs. PT Surya Pertiwi | Charnic Capital vs. MNC Studios International | Charnic Capital vs. NFC Indonesia PT |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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