Correlation Between Bank Central and PT Indofood
Can any of the company-specific risk be diversified away by investing in both Bank Central 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 Bank Central and PT Indofood into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bank Central Asia and PT Indofood Sukses, you can compare the effects of market volatilities on Bank Central 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 Bank Central with a short position of PT Indofood. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank Central and PT Indofood.
Diversification Opportunities for Bank Central and PT Indofood
-0.24 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Bank and INDF is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Bank Central Asia 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 Bank Central 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 Bank Central Asia 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 Bank Central i.e., Bank Central and PT Indofood go up and down completely randomly.
Pair Corralation between Bank Central and PT Indofood
Assuming the 90 days trading horizon Bank Central Asia is expected to generate 0.92 times more return on investment than PT Indofood. However, Bank Central Asia is 1.09 times less risky than PT Indofood. It trades about 0.05 of its potential returns per unit of risk. PT Indofood Sukses is currently generating about 0.03 per unit of risk. If you would invest 801,935 in Bank Central Asia on August 28, 2024 and sell it today you would earn a total of 215,565 from holding Bank Central Asia or generate 26.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bank Central Asia vs. PT Indofood Sukses
Performance |
| Timeline |
| Bank Central Asia |
| PT Indofood Sukses |
Bank Central and PT Indofood Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank Central and PT Indofood
The main advantage of trading using opposite Bank Central and PT Indofood positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank Central 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.| Bank Central vs. Bank Rakyat Indonesia | Bank Central vs. Bank Mandiri Persero | Bank Central vs. Bank Negara Indonesia | Bank Central vs. Astra International Tbk |
| PT Indofood vs. Astra International Tbk | PT Indofood vs. Unilever Indonesia Tbk | PT Indofood vs. Telkom Indonesia Tbk | PT Indofood vs. Bank Mandiri 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
Other Complementary Tools
| Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets | |
| FinTech Suite Use AI to screen and filter profitable investment opportunities | |
| Portfolio Dashboard Portfolio dashboard that provides centralized access to all your investments | |
| Portfolio Diagnostics Use generated alerts and portfolio events aggregator to diagnose current holdings | |
| Odds Of Bankruptcy Get analysis of equity chance of financial distress in the next 2 years |