Correlation Between Bank Negara and PT Indofood
Can any of the company-specific risk be diversified away by investing in both Bank Negara 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 Negara 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 Negara Indonesia and PT Indofood Sukses, you can compare the effects of market volatilities on Bank Negara 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 Negara with a short position of PT Indofood. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank Negara and PT Indofood.
Diversification Opportunities for Bank Negara and PT Indofood
-0.52 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Bank and INDF is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Bank Negara Indonesia 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 Negara 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 Negara Indonesia 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 Negara i.e., Bank Negara and PT Indofood go up and down completely randomly.
Pair Corralation between Bank Negara and PT Indofood
Assuming the 90 days trading horizon Bank Negara is expected to generate 1.3 times less return on investment than PT Indofood. In addition to that, Bank Negara is 1.36 times more volatile than PT Indofood Sukses. It trades about 0.02 of its total potential returns per unit of risk. PT Indofood Sukses is currently generating about 0.04 per unit of volatility. If you would invest 660,285 in PT Indofood Sukses on August 27, 2024 and sell it today you would earn a total of 87,215 from holding PT Indofood Sukses or generate 13.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bank Negara Indonesia vs. PT Indofood Sukses
Performance |
| Timeline |
| Bank Negara Indonesia |
| PT Indofood Sukses |
Bank Negara and PT Indofood Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank Negara and PT Indofood
The main advantage of trading using opposite Bank Negara and PT Indofood positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank Negara 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 Negara vs. Bank Mandiri Persero | Bank Negara vs. Bank Rakyat Indonesia | Bank Negara vs. Bank Central Asia | Bank Negara 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 CEOs Directory module to screen CEOs from public companies around the world.
Other Complementary Tools
| Portfolio Suggestion Get suggestions outside of your existing asset allocation including your own model portfolios | |
| Aroon Oscillator Analyze current equity momentum using Aroon Oscillator and other momentum ratios | |
| Price Ceiling Movement Calculate and plot Price Ceiling Movement for different equity instruments | |
| Portfolio Diagnostics Use generated alerts and portfolio events aggregator to diagnose current holdings | |
| Crypto Correlations Use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins |