Correlation Between Fks Multi and Sumber Tani
Can any of the company-specific risk be diversified away by investing in both Fks Multi and Sumber Tani 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 Fks Multi and Sumber Tani into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fks Multi Agro and Sumber Tani Agung, you can compare the effects of market volatilities on Fks Multi and Sumber Tani 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 Fks Multi with a short position of Sumber Tani. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fks Multi and Sumber Tani.
Diversification Opportunities for Fks Multi and Sumber Tani
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Fks and Sumber is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Fks Multi Agro and Sumber Tani Agung in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sumber Tani Agung and Fks Multi 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 Fks Multi Agro are associated (or correlated) with Sumber Tani. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sumber Tani Agung has no effect on the direction of Fks Multi i.e., Fks Multi and Sumber Tani go up and down completely randomly.
Pair Corralation between Fks Multi and Sumber Tani
Assuming the 90 days trading horizon Fks Multi Agro is expected to generate 0.1 times more return on investment than Sumber Tani. However, Fks Multi Agro is 10.17 times less risky than Sumber Tani. It trades about -0.26 of its potential returns per unit of risk. Sumber Tani Agung is currently generating about -0.27 per unit of risk. If you would invest 1,097,500 in Fks Multi Agro on August 27, 2024 and sell it today you would lose (7,500) from holding Fks Multi Agro or give up 0.68% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.24% |
| Values | Daily Returns |
Fks Multi Agro vs. Sumber Tani Agung
Performance |
| Timeline |
| Fks Multi Agro |
| Sumber Tani Agung |
Fks Multi and Sumber Tani Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fks Multi and Sumber Tani
The main advantage of trading using opposite Fks Multi and Sumber Tani positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fks Multi position performs unexpectedly, Sumber Tani 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 Sumber Tani will offset losses from the drop in Sumber Tani's long position.The idea behind Fks Multi Agro and Sumber Tani Agung 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.| Sumber Tani vs. Dharma Satya Nusantara | Sumber Tani vs. Saratoga Investama Sedaya | Sumber Tani vs. Surya Esa Perkasa | Sumber Tani vs. Elang Mahkota Teknologi |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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