Correlation Between NFC Indonesia and Royal Prima
Can any of the company-specific risk be diversified away by investing in both NFC Indonesia and Royal Prima 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 Royal Prima 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 Royal Prima PT, you can compare the effects of market volatilities on NFC Indonesia and Royal Prima 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 Royal Prima. Check out your portfolio center. Please also check ongoing floating volatility patterns of NFC Indonesia and Royal Prima.
Diversification Opportunities for NFC Indonesia and Royal Prima
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between NFC and Royal is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding NFC Indonesia PT and Royal Prima PT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Royal Prima PT 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 Royal Prima. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Royal Prima PT has no effect on the direction of NFC Indonesia i.e., NFC Indonesia and Royal Prima go up and down completely randomly.
Pair Corralation between NFC Indonesia and Royal Prima
Assuming the 90 days trading horizon NFC Indonesia PT is expected to generate 2.03 times more return on investment than Royal Prima. However, NFC Indonesia is 2.03 times more volatile than Royal Prima PT. It trades about 0.21 of its potential returns per unit of risk. Royal Prima PT is currently generating about 0.06 per unit of risk. If you would invest 120,000 in NFC Indonesia PT on November 3, 2024 and sell it today you would earn a total of 19,000 from holding NFC Indonesia PT or generate 15.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.0% |
| Values | Daily Returns |
NFC Indonesia PT vs. Royal Prima PT
Performance |
| Timeline |
| NFC Indonesia PT |
| Royal Prima PT |
NFC Indonesia and Royal Prima Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NFC Indonesia and Royal Prima
The main advantage of trading using opposite NFC Indonesia and Royal Prima positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NFC Indonesia position performs unexpectedly, Royal Prima 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 Royal Prima will offset losses from the drop in Royal Prima's long position.| NFC Indonesia vs. M Cash Integrasi | NFC Indonesia vs. Nusantara Voucher Distribution | NFC Indonesia vs. Digital Mediatama Maxima | NFC Indonesia vs. Multipolar Technology Tbk |
| Royal Prima vs. Medikaloka Hermina PT | Royal Prima vs. Sejahteraraya Anugrahjaya Tbk | Royal Prima vs. Prodia Widyahusada Tbk | Royal Prima vs. Sarana Meditama Metropolitan |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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