Correlation Between Equity Development and Sentra Food
Can any of the company-specific risk be diversified away by investing in both Equity Development and Sentra 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 Equity Development and Sentra Food into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Equity Development Investment and Sentra Food Indonesia, you can compare the effects of market volatilities on Equity Development and Sentra 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 Equity Development with a short position of Sentra Food. Check out your portfolio center. Please also check ongoing floating volatility patterns of Equity Development and Sentra Food.
Diversification Opportunities for Equity Development and Sentra Food
-0.08 | Correlation Coefficient |
Good diversification
The 3 months correlation between Equity and Sentra is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Equity Development Investment and Sentra Food Indonesia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sentra Food Indonesia and Equity Development 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 Equity Development Investment are associated (or correlated) with Sentra Food. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sentra Food Indonesia has no effect on the direction of Equity Development i.e., Equity Development and Sentra Food go up and down completely randomly.
Pair Corralation between Equity Development and Sentra Food
Assuming the 90 days trading horizon Equity Development Investment is expected to under-perform the Sentra Food. In addition to that, Equity Development is 2.78 times more volatile than Sentra Food Indonesia. It trades about -0.05 of its total potential returns per unit of risk. Sentra Food Indonesia is currently generating about -0.08 per unit of volatility. If you would invest 11,700 in Sentra Food Indonesia on September 2, 2024 and sell it today you would lose (200.00) from holding Sentra Food Indonesia or give up 1.71% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Equity Development Investment vs. Sentra Food Indonesia
Performance |
| Timeline |
| Equity Development |
| Sentra Food Indonesia |
Equity Development and Sentra Food Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Equity Development and Sentra Food
The main advantage of trading using opposite Equity Development and Sentra Food positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Equity Development position performs unexpectedly, Sentra 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 Sentra Food will offset losses from the drop in Sentra Food's long position.| Equity Development vs. Pacific Strategic Financial | Equity Development vs. Asuransi Harta Aman | Equity Development vs. Buana Finance Tbk | Equity Development vs. Asuransi Bintang Tbk |
| Sentra Food vs. Garudafood Putra Putri | Sentra Food vs. Estika Tata Tiara | Sentra Food vs. Campina Ice Cream | Sentra Food vs. PT Wahana Interfood |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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