Correlation Between Austindo Nusantara and Provident Agro
Can any of the company-specific risk be diversified away by investing in both Austindo Nusantara and Provident Agro 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 Austindo Nusantara and Provident Agro into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Austindo Nusantara Jaya and Provident Agro Tbk, you can compare the effects of market volatilities on Austindo Nusantara and Provident Agro 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 Austindo Nusantara with a short position of Provident Agro. Check out your portfolio center. Please also check ongoing floating volatility patterns of Austindo Nusantara and Provident Agro.
Diversification Opportunities for Austindo Nusantara and Provident Agro
-0.42 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Austindo and Provident is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Austindo Nusantara Jaya and Provident Agro Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Provident Agro Tbk and Austindo Nusantara 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 Austindo Nusantara Jaya are associated (or correlated) with Provident Agro. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Provident Agro Tbk has no effect on the direction of Austindo Nusantara i.e., Austindo Nusantara and Provident Agro go up and down completely randomly.
Pair Corralation between Austindo Nusantara and Provident Agro
Assuming the 90 days trading horizon Austindo Nusantara Jaya is expected to generate 0.35 times more return on investment than Provident Agro. However, Austindo Nusantara Jaya is 2.86 times less risky than Provident Agro. It trades about 0.18 of its potential returns per unit of risk. Provident Agro Tbk is currently generating about -0.02 per unit of risk. If you would invest 71,500 in Austindo Nusantara Jaya on October 21, 2024 and sell it today you would earn a total of 1,500 from holding Austindo Nusantara Jaya or generate 2.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Austindo Nusantara Jaya vs. Provident Agro Tbk
Performance |
| Timeline |
| Austindo Nusantara Jaya |
| Provident Agro Tbk |
Austindo Nusantara and Provident Agro Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Austindo Nusantara and Provident Agro
The main advantage of trading using opposite Austindo Nusantara and Provident Agro positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Austindo Nusantara position performs unexpectedly, Provident Agro 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 Provident Agro will offset losses from the drop in Provident Agro's long position.| Austindo Nusantara vs. Delta Djakarta Tbk | Austindo Nusantara vs. Merck Tbk | Austindo Nusantara vs. Mayora Indah Tbk | Austindo Nusantara vs. Ultra Jaya Milk |
| Provident Agro vs. Dharma Satya Nusantara | Provident Agro vs. Salim Ivomas Pratama | Provident Agro vs. Sawit Sumbermas Sarana | Provident Agro vs. Austindo Nusantara Jaya |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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