Correlation Between Nusa Palapa and Sekar Laut
Can any of the company-specific risk be diversified away by investing in both Nusa Palapa and Sekar Laut 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 Nusa Palapa and Sekar Laut into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nusa Palapa Gemilang and Sekar Laut Tbk, you can compare the effects of market volatilities on Nusa Palapa and Sekar Laut 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 Nusa Palapa with a short position of Sekar Laut. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nusa Palapa and Sekar Laut.
Diversification Opportunities for Nusa Palapa and Sekar Laut
-0.3 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Nusa and Sekar is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Nusa Palapa Gemilang and Sekar Laut Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sekar Laut Tbk and Nusa Palapa 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 Nusa Palapa Gemilang are associated (or correlated) with Sekar Laut. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sekar Laut Tbk has no effect on the direction of Nusa Palapa i.e., Nusa Palapa and Sekar Laut go up and down completely randomly.
Pair Corralation between Nusa Palapa and Sekar Laut
Assuming the 90 days trading horizon Nusa Palapa Gemilang is expected to under-perform the Sekar Laut. But the stock apears to be less risky and, when comparing its historical volatility, Nusa Palapa Gemilang is 3.24 times less risky than Sekar Laut. The stock trades about -0.36 of its potential returns per unit of risk. The Sekar Laut Tbk is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest 22,800 in Sekar Laut Tbk on September 1, 2024 and sell it today you would lose (3,300) from holding Sekar Laut Tbk or give up 14.47% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Nusa Palapa Gemilang vs. Sekar Laut Tbk
Performance |
| Timeline |
| Nusa Palapa Gemilang |
| Sekar Laut Tbk |
Nusa Palapa and Sekar Laut Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nusa Palapa and Sekar Laut
The main advantage of trading using opposite Nusa Palapa and Sekar Laut positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nusa Palapa position performs unexpectedly, Sekar Laut 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 Sekar Laut will offset losses from the drop in Sekar Laut's long position.| Nusa Palapa vs. Saraswanti Anugerah Makmur | Nusa Palapa vs. Berkah Beton Sadaya | Nusa Palapa vs. Triputra Agro Persada | Nusa Palapa vs. PT Sunter Lakeside |
| Sekar Laut vs. Siantar Top Tbk | Sekar Laut vs. Prasidha Aneka Niaga | Sekar Laut vs. Mandom Indonesia Tbk | Sekar Laut vs. Pyridam Farma 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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