Correlation Between Cisarua Mountain and Sentra Food
Can any of the company-specific risk be diversified away by investing in both Cisarua Mountain 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 Cisarua Mountain and Sentra Food into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cisarua Mountain Dairy and Sentra Food Indonesia, you can compare the effects of market volatilities on Cisarua Mountain 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 Cisarua Mountain with a short position of Sentra Food. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cisarua Mountain and Sentra Food.
Diversification Opportunities for Cisarua Mountain and Sentra Food
0.13 | Correlation Coefficient |
Average diversification
The 3 months correlation between Cisarua and Sentra is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Cisarua Mountain Dairy 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 Cisarua Mountain 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 Cisarua Mountain Dairy 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 Cisarua Mountain i.e., Cisarua Mountain and Sentra Food go up and down completely randomly.
Pair Corralation between Cisarua Mountain and Sentra Food
Assuming the 90 days trading horizon Cisarua Mountain Dairy is expected to under-perform the Sentra Food. In addition to that, Cisarua Mountain is 1.52 times more volatile than Sentra Food Indonesia. It trades about -0.04 of its total potential returns per unit of risk. Sentra Food Indonesia is currently generating about -0.02 per unit of volatility. If you would invest 12,200 in Sentra Food Indonesia on September 16, 2024 and sell it today you would lose (300.00) from holding Sentra Food Indonesia or give up 2.46% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Cisarua Mountain Dairy vs. Sentra Food Indonesia
Performance |
Timeline |
Cisarua Mountain Dairy |
Sentra Food Indonesia |
Cisarua Mountain and Sentra Food Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Cisarua Mountain and Sentra Food
The main advantage of trading using opposite Cisarua Mountain and Sentra Food positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cisarua Mountain 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.Cisarua Mountain vs. Avia Avian PT | ||
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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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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