Correlation Between Putra Mandiri and Sentra Food
Can any of the company-specific risk be diversified away by investing in both Putra Mandiri and Sentra Food 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 Putra Mandiri and Sentra Food into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Putra Mandiri Jembar and Sentra Food Indonesia, you can compare the effects of market volatilities on Putra Mandiri and Sentra Food 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 Putra Mandiri with a short position of Sentra Food. Check out your portfolio center. Please also check ongoing floating volatility patterns of Putra Mandiri and Sentra Food.
Diversification Opportunities for Putra Mandiri and Sentra Food
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Putra and Sentra is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Putra Mandiri Jembar and Sentra Food Indonesia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sentra Food Indonesia and Putra Mandiri 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 Putra Mandiri Jembar are associated (or correlated) with Sentra Food. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sentra Food Indonesia has no effect on the direction of Putra Mandiri i.e., Putra Mandiri and Sentra Food go up and down completely randomly.
Pair Corralation between Putra Mandiri and Sentra Food
Assuming the 90 days trading horizon Putra Mandiri Jembar is expected to under-perform the Sentra Food. But the stock apears to be less risky and, when comparing its historical volatility, Putra Mandiri Jembar is 1.84 times less risky than Sentra Food. The stock trades about -0.02 of its potential returns per unit of risk. The Sentra Food Indonesia is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 10,100 in Sentra Food Indonesia on September 19, 2024 and sell it today you would earn a total of 1,500 from holding Sentra Food Indonesia or generate 14.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Putra Mandiri Jembar vs. Sentra Food Indonesia
Performance |
| Timeline |
| Putra Mandiri Jembar |
| Sentra Food Indonesia |
Putra Mandiri and Sentra Food Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Putra Mandiri and Sentra Food
The main advantage of trading using opposite Putra Mandiri and Sentra Food positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Putra Mandiri position performs unexpectedly, Sentra Food 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 Sentra Food will offset losses from the drop in Sentra Food's long position.| Putra Mandiri vs. MNC Studios International | Putra Mandiri vs. Jaya Sukses Makmur | Putra Mandiri vs. Mitrabara Adiperdana PT | Putra Mandiri vs. PT Multi Garam |
| Sentra Food vs. Garudafood Putra Putri | Sentra Food vs. Wijaya Karya Bangunan | Sentra Food vs. Mitrabara Adiperdana PT | Sentra Food vs. PT Multi Garam |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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