Correlation Between NFC Indonesia and Wir Asia

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both NFC Indonesia and Wir Asia 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 Wir Asia 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 Wir Asia Tbk, you can compare the effects of market volatilities on NFC Indonesia and Wir Asia 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 Wir Asia. Check out your portfolio center. Please also check ongoing floating volatility patterns of NFC Indonesia and Wir Asia.

Diversification Opportunities for NFC Indonesia and Wir Asia

-0.68
  Correlation Coefficient

Excellent diversification

The 3 months correlation between NFC and Wir is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding NFC Indonesia PT and Wir Asia Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wir Asia 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 Wir Asia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wir Asia Tbk has no effect on the direction of NFC Indonesia i.e., NFC Indonesia and Wir Asia go up and down completely randomly.

Pair Corralation between NFC Indonesia and Wir Asia

Assuming the 90 days trading horizon NFC Indonesia PT is expected to generate 1.95 times more return on investment than Wir Asia. However, NFC Indonesia is 1.95 times more volatile than Wir Asia Tbk. It trades about 0.27 of its potential returns per unit of risk. Wir Asia Tbk is currently generating about -0.42 per unit of risk. If you would invest  107,000  in NFC Indonesia PT on August 27, 2024 and sell it today you would earn a total of  38,000  from holding NFC Indonesia PT or generate 35.51% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

NFC Indonesia PT  vs.  Wir Asia Tbk

 Performance 
       Timeline  
NFC Indonesia PT 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days NFC Indonesia PT has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's forward-looking signals remain quite persistent which may send shares a bit higher in December 2024. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.
Wir Asia Tbk 

Risk-Adjusted Performance

6 of 100

 
Weak
 
Strong
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in Wir Asia Tbk are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Wir Asia disclosed solid returns over the last few months and may actually be approaching a breakup point.

NFC Indonesia and Wir Asia Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with NFC Indonesia and Wir Asia

The main advantage of trading using opposite NFC Indonesia and Wir Asia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NFC Indonesia position performs unexpectedly, Wir Asia 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 Wir Asia will offset losses from the drop in Wir Asia's long position.
The idea behind NFC Indonesia PT and Wir Asia Tbk pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.

Other Complementary Tools

Competition Analyzer
Analyze and compare many basic indicators for a group of related or unrelated entities
Watchlist Optimization
Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm
Idea Optimizer
Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio
Bollinger Bands
Use Bollinger Bands indicator to analyze target price for a given investing horizon
USA ETFs
Find actively traded Exchange Traded Funds (ETF) in USA