Correlation Between Sentra Food and Indo Acidatama
Can any of the company-specific risk be diversified away by investing in both Sentra Food and Indo Acidatama 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 Indo Acidatama 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 Indo Acidatama Tbk, you can compare the effects of market volatilities on Sentra Food and Indo Acidatama 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 Indo Acidatama. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sentra Food and Indo Acidatama.
Diversification Opportunities for Sentra Food and Indo Acidatama
0.42 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Sentra and Indo is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Sentra Food Indonesia and Indo Acidatama Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Indo Acidatama 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 Indo Acidatama. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Indo Acidatama Tbk has no effect on the direction of Sentra Food i.e., Sentra Food and Indo Acidatama go up and down completely randomly.
Pair Corralation between Sentra Food and Indo Acidatama
Assuming the 90 days trading horizon Sentra Food Indonesia is expected to under-perform the Indo Acidatama. But the stock apears to be less risky and, when comparing its historical volatility, Sentra Food Indonesia is 1.12 times less risky than Indo Acidatama. The stock trades about -0.08 of its potential returns per unit of risk. The Indo Acidatama Tbk is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 5,000 in Indo Acidatama Tbk on September 3, 2024 and sell it today you would earn a total of 0.00 from holding Indo Acidatama Tbk or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sentra Food Indonesia vs. Indo Acidatama Tbk
Performance |
| Timeline |
| Sentra Food Indonesia |
| Indo Acidatama Tbk |
Sentra Food and Indo Acidatama Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sentra Food and Indo Acidatama
The main advantage of trading using opposite Sentra Food and Indo Acidatama positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sentra Food position performs unexpectedly, Indo Acidatama 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 Indo Acidatama will offset losses from the drop in Indo Acidatama's long position.| Sentra Food vs. Garudafood Putra Putri | Sentra Food vs. PT Wahana Interfood | Sentra Food vs. Mitra Pinasthika Mustika | Sentra Food vs. Jakarta Int Hotels |
| Indo Acidatama vs. Timah Persero Tbk | Indo Acidatama vs. Semen Indonesia Persero | Indo Acidatama vs. Mitra Pinasthika Mustika | Indo Acidatama vs. Jakarta Int Hotels |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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