Correlation Between FKS Food and Kalbe Farma
Can any of the company-specific risk be diversified away by investing in both FKS Food and Kalbe 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 Kalbe 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 Kalbe Farma Tbk, you can compare the effects of market volatilities on FKS Food and Kalbe 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 Kalbe Farma. Check out your portfolio center. Please also check ongoing floating volatility patterns of FKS Food and Kalbe Farma.
Diversification Opportunities for FKS Food and Kalbe Farma
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between FKS and Kalbe is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding FKS Food Sejahtera and Kalbe Farma Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kalbe Farma Tbk 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 Kalbe Farma. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kalbe Farma Tbk has no effect on the direction of FKS Food i.e., FKS Food and Kalbe Farma go up and down completely randomly.
Pair Corralation between FKS Food and Kalbe Farma
Assuming the 90 days trading horizon FKS Food Sejahtera is expected to under-perform the Kalbe Farma. But the stock apears to be less risky and, when comparing its historical volatility, FKS Food Sejahtera is 1.58 times less risky than Kalbe Farma. The stock trades about -0.48 of its potential returns per unit of risk. The Kalbe Farma Tbk is currently generating about -0.2 of returns per unit of risk over similar time horizon. If you would invest 161,500 in Kalbe Farma Tbk on September 1, 2024 and sell it today you would lose (11,000) from holding Kalbe Farma Tbk or give up 6.81% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
FKS Food Sejahtera vs. Kalbe Farma Tbk
Performance |
| Timeline |
| FKS Food Sejahtera |
| Kalbe Farma Tbk |
FKS Food and Kalbe Farma Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FKS Food and Kalbe Farma
The main advantage of trading using opposite FKS Food and Kalbe Farma positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FKS Food position performs unexpectedly, Kalbe 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 Kalbe Farma will offset losses from the drop in Kalbe Farma's long position.| FKS Food vs. Bank BRISyariah Tbk | FKS Food vs. Mitra Pinasthika Mustika | FKS Food vs. Jakarta Int Hotels | FKS Food vs. Indosterling Technomedia Tbk |
| Kalbe Farma vs. PT Indofood Sukses | Kalbe Farma vs. Unilever Indonesia Tbk | Kalbe Farma vs. Semen Indonesia Persero | Kalbe Farma vs. United Tractors Tbk |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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