Correlation Between Prodia Widyahusada and PT Sarimelati
Can any of the company-specific risk be diversified away by investing in both Prodia Widyahusada and PT Sarimelati 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 Prodia Widyahusada and PT Sarimelati into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Prodia Widyahusada Tbk and PT Sarimelati Kencana, you can compare the effects of market volatilities on Prodia Widyahusada and PT Sarimelati 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 Prodia Widyahusada with a short position of PT Sarimelati. Check out your portfolio center. Please also check ongoing floating volatility patterns of Prodia Widyahusada and PT Sarimelati.
Diversification Opportunities for Prodia Widyahusada and PT Sarimelati
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Prodia and PZZA is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Prodia Widyahusada Tbk and PT Sarimelati Kencana in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PT Sarimelati Kencana and Prodia Widyahusada 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 Prodia Widyahusada Tbk are associated (or correlated) with PT Sarimelati. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PT Sarimelati Kencana has no effect on the direction of Prodia Widyahusada i.e., Prodia Widyahusada and PT Sarimelati go up and down completely randomly.
Pair Corralation between Prodia Widyahusada and PT Sarimelati
Assuming the 90 days trading horizon Prodia Widyahusada Tbk is expected to generate 0.43 times more return on investment than PT Sarimelati. However, Prodia Widyahusada Tbk is 2.3 times less risky than PT Sarimelati. It trades about -0.25 of its potential returns per unit of risk. PT Sarimelati Kencana is currently generating about -0.68 per unit of risk. If you would invest 301,000 in Prodia Widyahusada Tbk on August 25, 2024 and sell it today you would lose (23,000) from holding Prodia Widyahusada Tbk or give up 7.64% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.65% |
| Values | Daily Returns |
Prodia Widyahusada Tbk vs. PT Sarimelati Kencana
Performance |
| Timeline |
| Prodia Widyahusada Tbk |
| PT Sarimelati Kencana |
Prodia Widyahusada and PT Sarimelati Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Prodia Widyahusada and PT Sarimelati
The main advantage of trading using opposite Prodia Widyahusada and PT Sarimelati positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Prodia Widyahusada position performs unexpectedly, PT Sarimelati 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 Sarimelati will offset losses from the drop in PT Sarimelati's long position.| Prodia Widyahusada vs. Astra Graphia Tbk | Prodia Widyahusada vs. Hexindo Adiperkasa Tbk | Prodia Widyahusada vs. Lautan Luas Tbk | Prodia Widyahusada vs. Citra Marga Nusaphala |
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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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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