Correlation Between FKS Food and Kimia Farma
Can any of the company-specific risk be diversified away by investing in both FKS Food and Kimia Farma 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 FKS Food and Kimia Farma into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between FKS Food Sejahtera and Kimia Farma Persero, you can compare the effects of market volatilities on FKS Food and Kimia Farma 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 FKS Food with a short position of Kimia Farma. Check out your portfolio center. Please also check ongoing floating volatility patterns of FKS Food and Kimia Farma.
Diversification Opportunities for FKS Food and Kimia Farma
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between FKS and Kimia is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding FKS Food Sejahtera and Kimia Farma Persero in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kimia Farma Persero and FKS 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 FKS Food Sejahtera are associated (or correlated) with Kimia Farma. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kimia Farma Persero has no effect on the direction of FKS Food i.e., FKS Food and Kimia Farma go up and down completely randomly.
Pair Corralation between FKS Food and Kimia Farma
Assuming the 90 days trading horizon FKS Food Sejahtera is expected to under-perform the Kimia Farma. But the stock apears to be less risky and, when comparing its historical volatility, FKS Food Sejahtera is 1.1 times less risky than Kimia Farma. The stock trades about -0.2 of its potential returns per unit of risk. The Kimia Farma Persero is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 63,000 in Kimia Farma Persero on October 7, 2024 and sell it today you would earn a total of 2,000 from holding Kimia Farma Persero or generate 3.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
FKS Food Sejahtera vs. Kimia Farma Persero
Performance |
| Timeline |
| FKS Food Sejahtera |
| Kimia Farma Persero |
FKS Food and Kimia Farma Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FKS Food and Kimia Farma
The main advantage of trading using opposite FKS Food and Kimia Farma positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FKS Food position performs unexpectedly, Kimia Farma 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 Kimia Farma will offset losses from the drop in Kimia Farma's long position.| FKS Food vs. Alam Sutera Realty | FKS Food vs. Sentul City Tbk | FKS Food vs. Gajah Tunggal Tbk | FKS Food vs. Akr Corporindo Tbk |
| Kimia Farma vs. Indofarma Tbk | Kimia Farma vs. Kalbe Farma Tbk | Kimia Farma vs. Wijaya Karya Beton | Kimia Farma vs. Adhi Karya Persero |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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