Correlation Between Sentra Food and Citatah Tbk

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

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

Diversification Opportunities for Sentra Food and Citatah Tbk

0.26

Correlation Coefficient

Sentra Food  Citatah Tbk

Modest diversification

The 3 months correlation between Sentra and Citatah is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Sentra Food Indonesia and Citatah Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Citatah Tbk and Sentra 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 Sentra Food Indonesia are associated (or correlated) with Citatah Tbk. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Citatah Tbk has no effect on the direction of Sentra Food i.e., Sentra Food and Citatah Tbk go up and down completely randomly.

Pair Corralation between Sentra Food and Citatah Tbk

Assuming the 90 days trading horizon Sentra Food Indonesia is expected to generate 1.34 times more return on investment than Citatah Tbk. However, Sentra Food is 1.34 times more volatile than Citatah Tbk. It trades about 0.02 of its potential returns per unit of risk. Citatah Tbk is currently generating about -0.02 per unit of risk. If you would invest  10,600  in Sentra Food Indonesia on October 7, 2024 and sell it today you would earn a total of  1,000.00  from holding Sentra Food Indonesia or generate 9.43% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	99.79%
Values	Daily Returns

Sentra Food Indonesia  vs.  Citatah Tbk

Sentra Food Indonesia

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sentra Food Indonesia has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent forward-looking signals, Sentra Food is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Citatah Tbk

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Citatah Tbk has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent forward-looking signals, Citatah Tbk is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Sentra Food and Citatah Tbk

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

The idea behind Sentra Food Indonesia and Citatah Tbk 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.

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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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.