Correlation Between Provident Agro and Cisadane Sawit
Can any of the company-specific risk be diversified away by investing in both Provident Agro and Cisadane Sawit 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 Cisadane Sawit 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 Cisadane Sawit Raya, you can compare the effects of market volatilities on Provident Agro and Cisadane Sawit 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 Cisadane Sawit. Check out your portfolio center. Please also check ongoing floating volatility patterns of Provident Agro and Cisadane Sawit.
Diversification Opportunities for Provident Agro and Cisadane Sawit
-0.04 | Correlation Coefficient |
Good diversification
The 3 months correlation between Provident and Cisadane is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Provident Agro Tbk and Cisadane Sawit Raya in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cisadane Sawit Raya 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 Cisadane Sawit. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cisadane Sawit Raya has no effect on the direction of Provident Agro i.e., Provident Agro and Cisadane Sawit go up and down completely randomly.
Pair Corralation between Provident Agro and Cisadane Sawit
Assuming the 90 days trading horizon Provident Agro Tbk is expected to under-perform the Cisadane Sawit. In addition to that, Provident Agro is 1.34 times more volatile than Cisadane Sawit Raya. It trades about -0.01 of its total potential returns per unit of risk. Cisadane Sawit Raya is currently generating about 0.12 per unit of volatility. If you would invest 63,000 in Cisadane Sawit Raya on October 26, 2024 and sell it today you would earn a total of 7,500 from holding Cisadane Sawit Raya or generate 11.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 98.33% |
| Values | Daily Returns |
Provident Agro Tbk vs. Cisadane Sawit Raya
Performance |
| Timeline |
| Provident Agro Tbk |
| Cisadane Sawit Raya |
Provident Agro and Cisadane Sawit Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Provident Agro and Cisadane Sawit
The main advantage of trading using opposite Provident Agro and Cisadane Sawit positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Provident Agro position performs unexpectedly, Cisadane Sawit 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 Cisadane Sawit will offset losses from the drop in Cisadane Sawit's long position.| Provident Agro vs. Dharma Satya Nusantara | Provident Agro vs. Salim Ivomas Pratama | Provident Agro vs. Sawit Sumbermas Sarana | Provident Agro vs. Austindo Nusantara Jaya |
| Cisadane Sawit vs. Dharma Satya Nusantara | Cisadane Sawit vs. Austindo Nusantara Jaya | Cisadane Sawit vs. Provident Agro Tbk | Cisadane Sawit vs. Sawit Sumbermas Sarana |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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