Correlation Between Prima Alloy and Sentra Food

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

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

Diversification Opportunities for Prima Alloy and Sentra Food

-0.22

Correlation Coefficient

Prima Alloy  Sentra Food

Very good diversification

The 3 months correlation between Prima and Sentra is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Prima Alloy Steel and Sentra Food Indonesia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sentra Food Indonesia and Prima Alloy 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 Prima Alloy Steel are associated (or correlated) with Sentra Food. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sentra Food Indonesia has no effect on the direction of Prima Alloy i.e., Prima Alloy and Sentra Food go up and down completely randomly.

Pair Corralation between Prima Alloy and Sentra Food

If you would invest  11,400  in Sentra Food Indonesia on February 17, 2024 and sell it today you would earn a total of  0.00  from holding Sentra Food Indonesia or generate 0.0% return on investment over 90 days.

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

Prima Alloy Steel  vs.  Sentra Food Indonesia

Prima Alloy Steel

Risk-Adjusted Performance

0 of 100

Very Weak

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

Sentra Food Indonesia

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Sentra Food Indonesia are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting basic indicators, Sentra Food may actually be approaching a critical reversion point that can send shares even higher in June 2024.

Pair Trading with Prima Alloy and Sentra Food

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

The idea behind Prima Alloy Steel and Sentra 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..