Correlation Between Catur Sentosa and Fast Food

Can any of the company-specific risk be diversified away by investing in both Catur Sentosa and Fast 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 Catur Sentosa and Fast Food into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Catur Sentosa Adiprana and Fast Food Indonesia, you can compare the effects of market volatilities on Catur Sentosa and Fast 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 Catur Sentosa with a short position of Fast Food. Check out your portfolio center. Please also check ongoing floating volatility patterns of Catur Sentosa and Fast Food.

Diversification Opportunities for Catur Sentosa and Fast Food

0.81

Correlation Coefficient

Catur Sentosa  Fast Food

Very poor diversification

The 3 months correlation between Catur and Fast is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Catur Sentosa Adiprana and Fast Food Indonesia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fast Food Indonesia and Catur Sentosa 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 Catur Sentosa Adiprana are associated (or correlated) with Fast Food. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fast Food Indonesia has no effect on the direction of Catur Sentosa i.e., Catur Sentosa and Fast Food go up and down completely randomly.

Pair Corralation between Catur Sentosa and Fast Food

Assuming the 90 days trading horizon Catur Sentosa Adiprana is expected to generate 0.71 times more return on investment than Fast Food. However, Catur Sentosa Adiprana is 1.42 times less risky than Fast Food. It trades about 0.06 of its potential returns per unit of risk. Fast Food Indonesia is currently generating about -0.03 per unit of risk. If you would invest  44,000  in Catur Sentosa Adiprana on October 20, 2024 and sell it today you would earn a total of  1,200  from holding Catur Sentosa Adiprana or generate 2.73% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	100.0%
Values	Daily Returns

Catur Sentosa Adiprana  vs.  Fast Food Indonesia

Catur Sentosa Adiprana

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Catur Sentosa Adiprana has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's forward-looking signals remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Fast Food Indonesia

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Fast Food Indonesia has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's forward-looking signals remain quite persistent which may send shares a bit higher in February 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Catur Sentosa and Fast Food

The main advantage of trading using opposite Catur Sentosa and Fast Food positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Catur Sentosa position performs unexpectedly, Fast 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 Fast Food will offset losses from the drop in Fast Food's long position.

The idea behind Catur Sentosa Adiprana and Fast Food Indonesia pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.