Correlation Between CN MODERN and PT Indofood
Can any of the company-specific risk be diversified away by investing in both CN MODERN and PT Indofood 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 CN MODERN and PT Indofood into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CN MODERN DAIRY and PT Indofood Sukses, you can compare the effects of market volatilities on CN MODERN and PT Indofood 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 CN MODERN with a short position of PT Indofood. Check out your portfolio center. Please also check ongoing floating volatility patterns of CN MODERN and PT Indofood.
Diversification Opportunities for CN MODERN and PT Indofood
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between 07M and ISM is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding CN MODERN DAIRY and PT Indofood Sukses in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PT Indofood Sukses and CN MODERN 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 CN MODERN DAIRY are associated (or correlated) with PT Indofood. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PT Indofood Sukses has no effect on the direction of CN MODERN i.e., CN MODERN and PT Indofood go up and down completely randomly.
Pair Corralation between CN MODERN and PT Indofood
Assuming the 90 days trading horizon CN MODERN DAIRY is expected to under-perform the PT Indofood. But the stock apears to be less risky and, when comparing its historical volatility, CN MODERN DAIRY is 1.77 times less risky than PT Indofood. The stock trades about -0.19 of its potential returns per unit of risk. The PT Indofood Sukses is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest 42.00 in PT Indofood Sukses on August 29, 2024 and sell it today you would lose (1.00) from holding PT Indofood Sukses or give up 2.38% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
CN MODERN DAIRY vs. PT Indofood Sukses
Performance |
| Timeline |
| CN MODERN DAIRY |
| PT Indofood Sukses |
CN MODERN and PT Indofood Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CN MODERN and PT Indofood
The main advantage of trading using opposite CN MODERN and PT Indofood positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CN MODERN position performs unexpectedly, PT Indofood 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 PT Indofood will offset losses from the drop in PT Indofood's long position.| CN MODERN vs. Apple Inc | CN MODERN vs. Apple Inc | CN MODERN vs. Superior Plus Corp | CN MODERN vs. SIVERS SEMICONDUCTORS AB |
| PT Indofood vs. Superior Plus Corp | PT Indofood vs. SIVERS SEMICONDUCTORS AB | PT Indofood vs. Talanx AG | PT Indofood vs. 2G ENERGY |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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