Correlation Between Minna Padi and Nusa Raya

Can any of the company-specific risk be diversified away by investing in both Minna Padi and Nusa Raya 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 Minna Padi and Nusa Raya into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Minna Padi Investama and Nusa Raya Cipta, you can compare the effects of market volatilities on Minna Padi and Nusa Raya 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 Minna Padi with a short position of Nusa Raya. Check out your portfolio center. Please also check ongoing floating volatility patterns of Minna Padi and Nusa Raya.

Diversification Opportunities for Minna Padi and Nusa Raya

0.63

Correlation Coefficient

Minna Padi  Nusa Raya

Poor diversification

The 3 months correlation between Minna and Nusa is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Minna Padi Investama and Nusa Raya Cipta in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nusa Raya Cipta and Minna Padi 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 Minna Padi Investama are associated (or correlated) with Nusa Raya. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nusa Raya Cipta has no effect on the direction of Minna Padi i.e., Minna Padi and Nusa Raya go up and down completely randomly.

Pair Corralation between Minna Padi and Nusa Raya

Assuming the 90 days trading horizon Minna Padi Investama is expected to generate 14.99 times more return on investment than Nusa Raya. However, Minna Padi is 14.99 times more volatile than Nusa Raya Cipta. It trades about 0.03 of its potential returns per unit of risk. Nusa Raya Cipta is currently generating about -0.15 per unit of risk. If you would invest  900.00  in Minna Padi Investama on February 4, 2024 and sell it today you would earn a total of  0.00  from holding Minna Padi Investama or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Minna Padi Investama  vs.  Nusa Raya Cipta

Minna Padi Investama

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Minna Padi Investama are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting basic indicators, Minna Padi disclosed solid returns over the last few months and may actually be approaching a breakup point.

Nusa Raya Cipta

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Nusa Raya Cipta are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting basic indicators, Nusa Raya may actually be approaching a critical reversion point that can send shares even higher in June 2024.

Pair Trading with Minna Padi and Nusa Raya

The main advantage of trading using opposite Minna Padi and Nusa Raya positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Minna Padi position performs unexpectedly, Nusa Raya 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 Nusa Raya will offset losses from the drop in Nusa Raya's long position.

The idea behind Minna Padi Investama and Nusa Raya Cipta 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.

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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.