Correlation Between Diamond Food and Pratama Abadi
Can any of the company-specific risk be diversified away by investing in both Diamond Food and Pratama Abadi 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 Diamond Food and Pratama Abadi into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Diamond Food Indonesia and Pratama Abadi Nusa, you can compare the effects of market volatilities on Diamond Food and Pratama Abadi 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 Diamond Food with a short position of Pratama Abadi. Check out your portfolio center. Please also check ongoing floating volatility patterns of Diamond Food and Pratama Abadi.
Diversification Opportunities for Diamond Food and Pratama Abadi
-0.06 | Correlation Coefficient |
Good diversification
The 3 months correlation between Diamond and Pratama is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Diamond Food Indonesia and Pratama Abadi Nusa in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pratama Abadi Nusa and Diamond Food 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 Diamond Food Indonesia are associated (or correlated) with Pratama Abadi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pratama Abadi Nusa has no effect on the direction of Diamond Food i.e., Diamond Food and Pratama Abadi go up and down completely randomly.
Pair Corralation between Diamond Food and Pratama Abadi
Assuming the 90 days trading horizon Diamond Food Indonesia is expected to generate 0.2 times more return on investment than Pratama Abadi. However, Diamond Food Indonesia is 4.88 times less risky than Pratama Abadi. It trades about -0.7 of its potential returns per unit of risk. Pratama Abadi Nusa is currently generating about -0.46 per unit of risk. If you would invest 77,000 in Diamond Food Indonesia on February 4, 2024 and sell it today you would lose (3,500) from holding Diamond Food Indonesia or give up 4.55% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Diamond Food Indonesia vs. Pratama Abadi Nusa
Performance |
Timeline |
Diamond Food Indonesia |
Pratama Abadi Nusa |
Diamond Food and Pratama Abadi Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Diamond Food and Pratama Abadi
The main advantage of trading using opposite Diamond Food and Pratama Abadi positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Diamond Food position performs unexpectedly, Pratama Abadi 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 Pratama Abadi will offset losses from the drop in Pratama Abadi's long position.Diamond Food vs. Garudafood Putra Putri | Diamond Food vs. Campina Ice Cream | Diamond Food vs. PT Wahana Interfood | Diamond Food vs. Era Mandiri Cemerlang |
Pratama Abadi vs. Garudafood Putra Putri | Pratama Abadi vs. Campina Ice Cream | Pratama Abadi vs. PT Wahana Interfood | Pratama Abadi vs. Era Mandiri Cemerlang |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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