Correlation Between Provident Agro and Sido Muncul
Can any of the company-specific risk be diversified away by investing in both Provident Agro and Sido Muncul 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 Sido Muncul 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 Sido Muncul PT, you can compare the effects of market volatilities on Provident Agro and Sido Muncul 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 Sido Muncul. Check out your portfolio center. Please also check ongoing floating volatility patterns of Provident Agro and Sido Muncul.
Diversification Opportunities for Provident Agro and Sido Muncul
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Provident and Sido is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Provident Agro Tbk and Sido Muncul PT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sido Muncul PT 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 Sido Muncul. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sido Muncul PT has no effect on the direction of Provident Agro i.e., Provident Agro and Sido Muncul go up and down completely randomly.
Pair Corralation between Provident Agro and Sido Muncul
Assuming the 90 days trading horizon Provident Agro Tbk is expected to under-perform the Sido Muncul. In addition to that, Provident Agro is 1.53 times more volatile than Sido Muncul PT. It trades about -0.25 of its total potential returns per unit of risk. Sido Muncul PT is currently generating about -0.11 per unit of volatility. If you would invest 60,000 in Sido Muncul PT on September 14, 2024 and sell it today you would lose (1,500) from holding Sido Muncul PT or give up 2.5% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Provident Agro Tbk vs. Sido Muncul PT
Performance |
| Timeline |
| Provident Agro Tbk |
| Sido Muncul PT |
Provident Agro and Sido Muncul Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Provident Agro and Sido Muncul
The main advantage of trading using opposite Provident Agro and Sido Muncul positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Provident Agro position performs unexpectedly, Sido Muncul 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 Sido Muncul will offset losses from the drop in Sido Muncul'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 |
| Sido Muncul vs. Austindo Nusantara Jaya | Sido Muncul vs. Garudafood Putra Putri | Sido Muncul vs. Provident Agro Tbk | Sido Muncul 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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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