Correlation Between Provident Agro and Eagle High
Can any of the company-specific risk be diversified away by investing in both Provident Agro and Eagle High 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 Provident Agro and Eagle High into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Provident Agro Tbk and Eagle High Plantations, you can compare the effects of market volatilities on Provident Agro and Eagle High 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 Provident Agro with a short position of Eagle High. Check out your portfolio center. Please also check ongoing floating volatility patterns of Provident Agro and Eagle High.
Diversification Opportunities for Provident Agro and Eagle High
0.31 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Provident and Eagle is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Provident Agro Tbk and Eagle High Plantations in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eagle High Plantations and Provident Agro 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 Provident Agro Tbk are associated (or correlated) with Eagle High. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eagle High Plantations has no effect on the direction of Provident Agro i.e., Provident Agro and Eagle High go up and down completely randomly.
Pair Corralation between Provident Agro and Eagle High
Assuming the 90 days trading horizon Provident Agro Tbk is expected to under-perform the Eagle High. But the stock apears to be less risky and, when comparing its historical volatility, Provident Agro Tbk is 2.82 times less risky than Eagle High. The stock trades about -0.23 of its potential returns per unit of risk. The Eagle High Plantations is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 6,200 in Eagle High Plantations on August 24, 2024 and sell it today you would earn a total of 0.00 from holding Eagle High Plantations or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Provident Agro Tbk vs. Eagle High Plantations
Performance |
| Timeline |
| Provident Agro Tbk |
| Eagle High Plantations |
Provident Agro and Eagle High Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Provident Agro and Eagle High
The main advantage of trading using opposite Provident Agro and Eagle High positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Provident Agro position performs unexpectedly, Eagle High 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 Eagle High will offset losses from the drop in Eagle High's long position.| Provident Agro vs. Charoen Pokphand Indonesia | Provident Agro vs. Kalbe Farma Tbk | Provident Agro vs. Indofood Cbp Sukses | Provident Agro vs. PT Indofood Sukses |
| Eagle High vs. Perusahaan Perkebunan London | Eagle High vs. Salim Ivomas Pratama | Eagle High vs. Alam Sutera Realty | Eagle High vs. Delta Dunia Makmur |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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