Correlation Between Sentra Food and First Media
Can any of the company-specific risk be diversified away by investing in both Sentra Food and First Media 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 First Media 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 First Media Tbk, you can compare the effects of market volatilities on Sentra Food and First Media 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 First Media. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sentra Food and First Media.
Diversification Opportunities for Sentra Food and First Media
-0.45 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Sentra and First is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Sentra Food Indonesia and First Media Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Media Tbk 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 First Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Media Tbk has no effect on the direction of Sentra Food i.e., Sentra Food and First Media go up and down completely randomly.
Pair Corralation between Sentra Food and First Media
Assuming the 90 days trading horizon Sentra Food Indonesia is expected to under-perform the First Media. But the stock apears to be less risky and, when comparing its historical volatility, Sentra Food Indonesia is 1.31 times less risky than First Media. The stock trades about 0.0 of its potential returns per unit of risk. The First Media Tbk is currently generating about 0.27 of returns per unit of risk over similar time horizon. If you would invest 3,200 in First Media Tbk on September 1, 2024 and sell it today you would earn a total of 6,500 from holding First Media Tbk or generate 203.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sentra Food Indonesia vs. First Media Tbk
Performance |
| Timeline |
| Sentra Food Indonesia |
| First Media Tbk |
Sentra Food and First Media Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sentra Food and First Media
The main advantage of trading using opposite Sentra Food and First Media positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sentra Food position performs unexpectedly, First Media 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 First Media will offset losses from the drop in First Media'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 |
| First Media vs. Indosat Tbk | First Media vs. XL Axiata Tbk | First Media vs. Energi Mega Persada | First Media vs. Bakrie Brothers 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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