Correlation Between Sentra Food and Buyung Poetra
Can any of the company-specific risk be diversified away by investing in both Sentra Food and Buyung Poetra 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 Buyung Poetra 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 Buyung Poetra Sembada, you can compare the effects of market volatilities on Sentra Food and Buyung Poetra 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 Buyung Poetra. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sentra Food and Buyung Poetra.
Diversification Opportunities for Sentra Food and Buyung Poetra
0.08 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Sentra and Buyung is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Sentra Food Indonesia and Buyung Poetra Sembada in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Buyung Poetra Sembada 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 Buyung Poetra. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Buyung Poetra Sembada has no effect on the direction of Sentra Food i.e., Sentra Food and Buyung Poetra go up and down completely randomly.
Pair Corralation between Sentra Food and Buyung Poetra
Assuming the 90 days trading horizon Sentra Food Indonesia is expected to under-perform the Buyung Poetra. In addition to that, Sentra Food is 1.04 times more volatile than Buyung Poetra Sembada. It trades about -0.08 of its total potential returns per unit of risk. Buyung Poetra Sembada is currently generating about -0.05 per unit of volatility. If you would invest 15,295 in Buyung Poetra Sembada on August 25, 2024 and sell it today you would lose (3,195) from holding Buyung Poetra Sembada or give up 20.89% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.22% |
| Values | Daily Returns |
Sentra Food Indonesia vs. Buyung Poetra Sembada
Performance |
| Timeline |
| Sentra Food Indonesia |
| Buyung Poetra Sembada |
Sentra Food and Buyung Poetra Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sentra Food and Buyung Poetra
The main advantage of trading using opposite Sentra Food and Buyung Poetra positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sentra Food position performs unexpectedly, Buyung Poetra 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 Buyung Poetra will offset losses from the drop in Buyung Poetra'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 |
| Buyung Poetra vs. Charoen Pokphand Indonesia | Buyung Poetra vs. Kalbe Farma Tbk | Buyung Poetra vs. Indofood Cbp Sukses | Buyung Poetra vs. Akr Corporindo Tbk |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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