Correlation Between NMI Holdings and PT Indofood
Can any of the company-specific risk be diversified away by investing in both NMI Holdings 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 NMI Holdings and PT Indofood into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NMI Holdings and PT Indofood Sukses, you can compare the effects of market volatilities on NMI Holdings 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 NMI Holdings with a short position of PT Indofood. Check out your portfolio center. Please also check ongoing floating volatility patterns of NMI Holdings and PT Indofood.
Diversification Opportunities for NMI Holdings and PT Indofood
-0.44 | Correlation Coefficient |
Very good diversification
The 3 months correlation between NMI and ISM is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding NMI Holdings 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 NMI Holdings 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 NMI Holdings 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 NMI Holdings i.e., NMI Holdings and PT Indofood go up and down completely randomly.
Pair Corralation between NMI Holdings and PT Indofood
Assuming the 90 days horizon NMI Holdings is expected to generate 0.38 times more return on investment than PT Indofood. However, NMI Holdings is 2.6 times less risky than PT Indofood. It trades about 0.09 of its potential returns per unit of risk. PT Indofood Sukses is currently generating about 0.02 per unit of risk. If you would invest 1,860 in NMI Holdings on August 29, 2024 and sell it today you would earn a total of 1,780 from holding NMI Holdings or generate 95.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
NMI Holdings vs. PT Indofood Sukses
Performance |
| Timeline |
| NMI Holdings |
| PT Indofood Sukses |
NMI Holdings and PT Indofood Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NMI Holdings and PT Indofood
The main advantage of trading using opposite NMI Holdings and PT Indofood positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NMI Holdings 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.| NMI Holdings vs. CSSC Offshore Marine | NMI Holdings vs. SIEM OFFSHORE NEW | NMI Holdings vs. PARKEN Sport Entertainment | NMI Holdings vs. SK TELECOM TDADR |
| PT Indofood vs. Superior Plus Corp | PT Indofood vs. NMI Holdings | PT Indofood vs. Origin Agritech | PT Indofood vs. SIVERS SEMICONDUCTORS AB |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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