Correlation Between NISSAN CHEMICAL and PT Indo
Can any of the company-specific risk be diversified away by investing in both NISSAN CHEMICAL and PT Indo 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 NISSAN CHEMICAL and PT Indo into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NISSAN CHEMICAL IND and PT Indo Tambangraya, you can compare the effects of market volatilities on NISSAN CHEMICAL and PT Indo 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 NISSAN CHEMICAL with a short position of PT Indo. Check out your portfolio center. Please also check ongoing floating volatility patterns of NISSAN CHEMICAL and PT Indo.
Diversification Opportunities for NISSAN CHEMICAL and PT Indo
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between NISSAN and 3IB is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding NISSAN CHEMICAL IND and PT Indo Tambangraya in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PT Indo Tambangraya and NISSAN CHEMICAL 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 NISSAN CHEMICAL IND are associated (or correlated) with PT Indo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PT Indo Tambangraya has no effect on the direction of NISSAN CHEMICAL i.e., NISSAN CHEMICAL and PT Indo go up and down completely randomly.
Pair Corralation between NISSAN CHEMICAL and PT Indo
Assuming the 90 days trading horizon NISSAN CHEMICAL IND is expected to under-perform the PT Indo. But the stock apears to be less risky and, when comparing its historical volatility, NISSAN CHEMICAL IND is 1.37 times less risky than PT Indo. The stock trades about -0.12 of its potential returns per unit of risk. The PT Indo Tambangraya is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 160.00 in PT Indo Tambangraya on September 14, 2024 and sell it today you would earn a total of 2.00 from holding PT Indo Tambangraya or generate 1.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
NISSAN CHEMICAL IND vs. PT Indo Tambangraya
Performance |
| Timeline |
| NISSAN CHEMICAL IND |
| PT Indo Tambangraya |
NISSAN CHEMICAL and PT Indo Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NISSAN CHEMICAL and PT Indo
The main advantage of trading using opposite NISSAN CHEMICAL and PT Indo positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NISSAN CHEMICAL position performs unexpectedly, PT Indo 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 PT Indo will offset losses from the drop in PT Indo's long position.| NISSAN CHEMICAL vs. Apple Inc | NISSAN CHEMICAL vs. Apple Inc | NISSAN CHEMICAL vs. Apple Inc | NISSAN CHEMICAL vs. Apple Inc |
| PT Indo vs. Quaker Chemical | PT Indo vs. Performance Food Group | PT Indo vs. AIR PRODCHEMICALS | PT Indo vs. NISSAN CHEMICAL IND |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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