Correlation Between Provident Agro and Dharma Satya
Can any of the company-specific risk be diversified away by investing in both Provident Agro and Dharma Satya 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 Dharma Satya 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 Dharma Satya Nusantara, you can compare the effects of market volatilities on Provident Agro and Dharma Satya 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 Dharma Satya. Check out your portfolio center. Please also check ongoing floating volatility patterns of Provident Agro and Dharma Satya.
Diversification Opportunities for Provident Agro and Dharma Satya
-0.21 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Provident and Dharma is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Provident Agro Tbk and Dharma Satya Nusantara in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dharma Satya Nusantara 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 Dharma Satya. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dharma Satya Nusantara has no effect on the direction of Provident Agro i.e., Provident Agro and Dharma Satya go up and down completely randomly.
Pair Corralation between Provident Agro and Dharma Satya
Assuming the 90 days trading horizon Provident Agro Tbk is expected to under-perform the Dharma Satya. In addition to that, Provident Agro is 1.11 times more volatile than Dharma Satya Nusantara. It trades about -0.03 of its total potential returns per unit of risk. Dharma Satya Nusantara is currently generating about 0.05 per unit of volatility. If you would invest 61,739 in Dharma Satya Nusantara on November 2, 2024 and sell it today you would earn a total of 36,261 from holding Dharma Satya Nusantara or generate 58.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.79% |
| Values | Daily Returns |
Provident Agro Tbk vs. Dharma Satya Nusantara
Performance |
| Timeline |
| Provident Agro Tbk |
| Dharma Satya Nusantara |
Provident Agro and Dharma Satya Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Provident Agro and Dharma Satya
The main advantage of trading using opposite Provident Agro and Dharma Satya positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Provident Agro position performs unexpectedly, Dharma Satya 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 Dharma Satya will offset losses from the drop in Dharma Satya'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 |
| Dharma Satya vs. Salim Ivomas Pratama | Dharma Satya vs. Sawit Sumbermas Sarana | Dharma Satya vs. Austindo Nusantara Jaya | Dharma Satya vs. Provident Agro 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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