Correlation Between Saratoga Investama and Provident Agro
Can any of the company-specific risk be diversified away by investing in both Saratoga Investama and Provident Agro 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 Saratoga Investama and Provident Agro into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Saratoga Investama Sedaya and Provident Agro Tbk, you can compare the effects of market volatilities on Saratoga Investama and Provident Agro 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 Saratoga Investama with a short position of Provident Agro. Check out your portfolio center. Please also check ongoing floating volatility patterns of Saratoga Investama and Provident Agro.
Diversification Opportunities for Saratoga Investama and Provident Agro
0.22 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Saratoga and Provident is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Saratoga Investama Sedaya and Provident Agro Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Provident Agro Tbk and Saratoga Investama 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 Saratoga Investama Sedaya are associated (or correlated) with Provident Agro. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Provident Agro Tbk has no effect on the direction of Saratoga Investama i.e., Saratoga Investama and Provident Agro go up and down completely randomly.
Pair Corralation between Saratoga Investama and Provident Agro
Assuming the 90 days trading horizon Saratoga Investama Sedaya is expected to under-perform the Provident Agro. But the stock apears to be less risky and, when comparing its historical volatility, Saratoga Investama Sedaya is 2.25 times less risky than Provident Agro. The stock trades about -0.11 of its potential returns per unit of risk. The Provident Agro Tbk is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest 43,600 in Provident Agro Tbk on February 5, 2024 and sell it today you would lose (4,200) from holding Provident Agro Tbk or give up 9.63% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Saratoga Investama Sedaya vs. Provident Agro Tbk
Performance |
Timeline |
Saratoga Investama Sedaya |
Provident Agro Tbk |
Saratoga Investama and Provident Agro Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Saratoga Investama and Provident Agro
The main advantage of trading using opposite Saratoga Investama and Provident Agro positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Saratoga Investama position performs unexpectedly, Provident Agro 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 Provident Agro will offset losses from the drop in Provident Agro's long position.Saratoga Investama vs. Maskapai Reasuransi Indonesia | Saratoga Investama vs. Lenox Pasifik Investama | Saratoga Investama vs. Paninvest Tbk | Saratoga Investama vs. Bank Mayapada Internasional |
Provident Agro vs. Dharma Satya Nusantara | Provident Agro vs. Salim Ivomas Pratama | Provident Agro vs. Sawit Sumbermas Sarana | Provident Agro vs. Austindo Nusantara Jaya |
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 Anywhere module to track or share privately all of your investments from the convenience of any device.
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