Correlation Between Sentra Food and Diamond Food
Can any of the company-specific risk be diversified away by investing in both Sentra Food and Diamond Food 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 Sentra Food and Diamond Food into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sentra Food Indonesia and Diamond Food Indonesia, you can compare the effects of market volatilities on Sentra Food and Diamond Food 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 Sentra Food with a short position of Diamond Food. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sentra Food and Diamond Food.
Diversification Opportunities for Sentra Food and Diamond Food
0.21 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Sentra and Diamond is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Sentra Food Indonesia and Diamond Food Indonesia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Diamond Food Indonesia and Sentra Food 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 Sentra Food Indonesia are associated (or correlated) with Diamond Food. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Diamond Food Indonesia has no effect on the direction of Sentra Food i.e., Sentra Food and Diamond Food go up and down completely randomly.
Pair Corralation between Sentra Food and Diamond Food
Assuming the 90 days trading horizon Sentra Food Indonesia is expected to under-perform the Diamond Food. But the stock apears to be less risky and, when comparing its historical volatility, Sentra Food Indonesia is 1.06 times less risky than Diamond Food. The stock trades about -0.07 of its potential returns per unit of risk. The Diamond Food Indonesia is currently generating about -0.05 of returns per unit of risk over similar time horizon. If you would invest 81,000 in Diamond Food Indonesia on August 26, 2024 and sell it today you would lose (1,000.00) from holding Diamond Food Indonesia or give up 1.23% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 90.91% |
| Values | Daily Returns |
Sentra Food Indonesia vs. Diamond Food Indonesia
Performance |
| Timeline |
| Sentra Food Indonesia |
| Diamond Food Indonesia |
Sentra Food and Diamond Food Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sentra Food and Diamond Food
The main advantage of trading using opposite Sentra Food and Diamond Food positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sentra Food position performs unexpectedly, Diamond Food 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 Diamond Food will offset losses from the drop in Diamond Food's long position.| Sentra Food vs. Buyung Poetra Sembada | Sentra Food vs. Garudafood Putra Putri | Sentra Food vs. Campina Ice Cream | Sentra Food vs. Wijaya Karya Bangunan |
| Diamond Food vs. Garudafood Putra Putri | Diamond Food vs. Campina Ice Cream | Diamond Food vs. Uni Charm Indonesia | Diamond Food vs. Sariguna Primatirta PT |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
Other Complementary Tools
| Equity Analysis Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities | |
| Efficient Frontier Plot and analyze your portfolio and positions against risk-return landscape of the market. | |
| Portfolio Suggestion Get suggestions outside of your existing asset allocation including your own model portfolios | |
| Stock Tickers Use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites | |
| Funds Screener Find actively-traded funds from around the world traded on over 30 global exchanges |