Correlation Between Provident Agro and Mahkota Group
Can any of the company-specific risk be diversified away by investing in both Provident Agro and Mahkota Group 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 Mahkota Group 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 Mahkota Group Tbk, you can compare the effects of market volatilities on Provident Agro and Mahkota Group 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 Mahkota Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Provident Agro and Mahkota Group.
Diversification Opportunities for Provident Agro and Mahkota Group
0.01 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Provident and Mahkota is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Provident Agro Tbk and Mahkota Group Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mahkota Group 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 Mahkota Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mahkota Group Tbk has no effect on the direction of Provident Agro i.e., Provident Agro and Mahkota Group go up and down completely randomly.
Pair Corralation between Provident Agro and Mahkota Group
Assuming the 90 days trading horizon Provident Agro Tbk is expected to under-perform the Mahkota Group. In addition to that, Provident Agro is 1.6 times more volatile than Mahkota Group Tbk. It trades about -0.02 of its total potential returns per unit of risk. Mahkota Group Tbk is currently generating about -0.03 per unit of volatility. If you would invest 69,500 in Mahkota Group Tbk on October 25, 2024 and sell it today you would lose (2,000) from holding Mahkota Group Tbk or give up 2.88% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Provident Agro Tbk vs. Mahkota Group Tbk
Performance |
| Timeline |
| Provident Agro Tbk |
| Mahkota Group Tbk |
Provident Agro and Mahkota Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Provident Agro and Mahkota Group
The main advantage of trading using opposite Provident Agro and Mahkota Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Provident Agro position performs unexpectedly, Mahkota Group 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 Mahkota Group will offset losses from the drop in Mahkota Group'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 |
| Mahkota Group vs. Austindo Nusantara Jaya | Mahkota Group vs. Garudafood Putra Putri | Mahkota Group vs. Provident Agro Tbk | Mahkota Group vs. Dharma Satya Nusantara |
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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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