Correlation Between Sentra Food and Sanurhasta Mitra

Can any of the company-specific risk be diversified away by investing in both Sentra Food and Sanurhasta Mitra 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 Sanurhasta Mitra 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 Sanurhasta Mitra PT, you can compare the effects of market volatilities on Sentra Food and Sanurhasta Mitra 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 Sanurhasta Mitra. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sentra Food and Sanurhasta Mitra.

Diversification Opportunities for Sentra Food and Sanurhasta Mitra

-0.4

Correlation Coefficient

Sentra Food  Sanurhasta Mitra

Very good diversification

The 3 months correlation between Sentra and Sanurhasta is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Sentra Food Indonesia and Sanurhasta Mitra PT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sanurhasta Mitra 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 Sanurhasta Mitra. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sanurhasta Mitra has no effect on the direction of Sentra Food i.e., Sentra Food and Sanurhasta Mitra go up and down completely randomly.

Pair Corralation between Sentra Food and Sanurhasta Mitra

Assuming the 90 days trading horizon Sentra Food Indonesia is expected to under-perform the Sanurhasta Mitra. But the stock apears to be less risky and, when comparing its historical volatility, Sentra Food Indonesia is 2.71 times less risky than Sanurhasta Mitra. The stock trades about -0.01 of its potential returns per unit of risk. The Sanurhasta Mitra PT is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  2,600  in Sanurhasta Mitra PT on September 3, 2024 and sell it today you would earn a total of  800.00  from holding Sanurhasta Mitra PT or generate 30.77% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Sentra Food Indonesia  vs.  Sanurhasta Mitra PT

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.

Sanurhasta Mitra

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Sanurhasta Mitra PT are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Sanurhasta Mitra disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Sentra Food and Sanurhasta Mitra

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

The idea behind Sentra Food Indonesia and Sanurhasta Mitra PT 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.