Correlation Between Provident Agro and Martina Berto
Can any of the company-specific risk be diversified away by investing in both Provident Agro and Martina Berto 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 Martina Berto 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 Martina Berto Tbk, you can compare the effects of market volatilities on Provident Agro and Martina Berto 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 Martina Berto. Check out your portfolio center. Please also check ongoing floating volatility patterns of Provident Agro and Martina Berto.
Diversification Opportunities for Provident Agro and Martina Berto
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Provident and Martina is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Provident Agro Tbk and Martina Berto Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Martina Berto Tbk 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 Martina Berto. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Martina Berto Tbk has no effect on the direction of Provident Agro i.e., Provident Agro and Martina Berto go up and down completely randomly.
Pair Corralation between Provident Agro and Martina Berto
Assuming the 90 days trading horizon Provident Agro Tbk is expected to under-perform the Martina Berto. But the stock apears to be less risky and, when comparing its historical volatility, Provident Agro Tbk is 1.05 times less risky than Martina Berto. The stock trades about -0.25 of its potential returns per unit of risk. The Martina Berto Tbk is currently generating about -0.11 of returns per unit of risk over similar time horizon. If you would invest 9,400 in Martina Berto Tbk on September 14, 2024 and sell it today you would lose (400.00) from holding Martina Berto Tbk or give up 4.26% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Provident Agro Tbk vs. Martina Berto Tbk
Performance |
| Timeline |
| Provident Agro Tbk |
| Martina Berto Tbk |
Provident Agro and Martina Berto Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Provident Agro and Martina Berto
The main advantage of trading using opposite Provident Agro and Martina Berto positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Provident Agro position performs unexpectedly, Martina Berto 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 Martina Berto will offset losses from the drop in Martina Berto'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 |
| Martina Berto vs. Mustika Ratu Tbk | Martina Berto vs. Langgeng Makmur Industri | Martina Berto vs. Kedaung Indah Can | Martina Berto vs. Mandom Indonesia 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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