Correlation Between Provident Agro and Pt Pradiksi
Can any of the company-specific risk be diversified away by investing in both Provident Agro and Pt Pradiksi 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 Pt Pradiksi 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 Pt Pradiksi Gunatama, you can compare the effects of market volatilities on Provident Agro and Pt Pradiksi 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 Pt Pradiksi. Check out your portfolio center. Please also check ongoing floating volatility patterns of Provident Agro and Pt Pradiksi.
Diversification Opportunities for Provident Agro and Pt Pradiksi
-0.16 | Correlation Coefficient |
Good diversification
The 3 months correlation between Provident and PGUN is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Provident Agro Tbk and Pt Pradiksi Gunatama in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pt Pradiksi Gunatama 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 Pt Pradiksi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pt Pradiksi Gunatama has no effect on the direction of Provident Agro i.e., Provident Agro and Pt Pradiksi go up and down completely randomly.
Pair Corralation between Provident Agro and Pt Pradiksi
Assuming the 90 days trading horizon Provident Agro Tbk is expected to under-perform the Pt Pradiksi. But the stock apears to be less risky and, when comparing its historical volatility, Provident Agro Tbk is 2.87 times less risky than Pt Pradiksi. The stock trades about -0.16 of its potential returns per unit of risk. The Pt Pradiksi Gunatama is currently generating about 0.69 of returns per unit of risk over similar time horizon. If you would invest 42,400 in Pt Pradiksi Gunatama on November 5, 2024 and sell it today you would earn a total of 31,100 from holding Pt Pradiksi Gunatama or generate 73.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Provident Agro Tbk vs. Pt Pradiksi Gunatama
Performance |
| Timeline |
| Provident Agro Tbk |
| Pt Pradiksi Gunatama |
Provident Agro and Pt Pradiksi Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Provident Agro and Pt Pradiksi
The main advantage of trading using opposite Provident Agro and Pt Pradiksi positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Provident Agro position performs unexpectedly, Pt Pradiksi 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 Pt Pradiksi will offset losses from the drop in Pt Pradiksi'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 |
| Pt Pradiksi vs. Triputra Agro Persada | Pt Pradiksi vs. Dayamitra Telekomunikasi PT | Pt Pradiksi vs. RMK Energy PT | Pt Pradiksi 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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