Correlation Between Sentra Food and Royalindo Investa
Can any of the company-specific risk be diversified away by investing in both Sentra Food and Royalindo Investa 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 Royalindo Investa 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 Royalindo Investa Wijaya, you can compare the effects of market volatilities on Sentra Food and Royalindo Investa 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 Royalindo Investa. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sentra Food and Royalindo Investa.
Diversification Opportunities for Sentra Food and Royalindo Investa
-0.1 | Correlation Coefficient |
Good diversification
The 3 months correlation between Sentra and Royalindo is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Sentra Food Indonesia and Royalindo Investa Wijaya in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Royalindo Investa Wijaya 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 Royalindo Investa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Royalindo Investa Wijaya has no effect on the direction of Sentra Food i.e., Sentra Food and Royalindo Investa go up and down completely randomly.
Pair Corralation between Sentra Food and Royalindo Investa
Assuming the 90 days trading horizon Sentra Food Indonesia is expected to generate 2.18 times more return on investment than Royalindo Investa. However, Sentra Food is 2.18 times more volatile than Royalindo Investa Wijaya. It trades about 0.04 of its potential returns per unit of risk. Royalindo Investa Wijaya is currently generating about 0.05 per unit of risk. If you would invest 10,000 in Sentra Food Indonesia on September 14, 2024 and sell it today you would earn a total of 1,700 from holding Sentra Food Indonesia or generate 17.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sentra Food Indonesia vs. Royalindo Investa Wijaya
Performance |
| Timeline |
| Sentra Food Indonesia |
| Royalindo Investa Wijaya |
Sentra Food and Royalindo Investa Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sentra Food and Royalindo Investa
The main advantage of trading using opposite Sentra Food and Royalindo Investa positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sentra Food position performs unexpectedly, Royalindo Investa 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 Royalindo Investa will offset losses from the drop in Royalindo Investa's long position.| Sentra Food vs. Garudafood Putra Putri | Sentra Food vs. Estika Tata Tiara | Sentra Food vs. Campina Ice Cream | Sentra Food vs. PT Wahana Interfood |
| Royalindo Investa vs. Andalan Sakti Primaindo | Royalindo Investa vs. Bumi Benowo Sukses | Royalindo Investa vs. Bima Sakti Pertiwi | Royalindo Investa vs. Agro Yasa Lestari |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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