Correlation Between PT Bank and Indofood CBP
Can any of the company-specific risk be diversified away by investing in both PT Bank and Indofood CBP 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 PT Bank and Indofood CBP into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PT Bank Rakyat and Indofood CBP Sukses, you can compare the effects of market volatilities on PT Bank and Indofood CBP 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 PT Bank with a short position of Indofood CBP. Check out your portfolio center. Please also check ongoing floating volatility patterns of PT Bank and Indofood CBP.
Diversification Opportunities for PT Bank and Indofood CBP
-0.59 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between BKRKF and Indofood is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding PT Bank Rakyat and Indofood CBP Sukses in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Indofood CBP Sukses and PT Bank 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 PT Bank Rakyat are associated (or correlated) with Indofood CBP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Indofood CBP Sukses has no effect on the direction of PT Bank i.e., PT Bank and Indofood CBP go up and down completely randomly.
Pair Corralation between PT Bank and Indofood CBP
Assuming the 90 days horizon PT Bank Rakyat is expected to generate 3.5 times more return on investment than Indofood CBP. However, PT Bank is 3.5 times more volatile than Indofood CBP Sukses. It trades about -0.01 of its potential returns per unit of risk. Indofood CBP Sukses is currently generating about -0.21 per unit of risk. If you would invest 28.00 in PT Bank Rakyat on September 14, 2024 and sell it today you would lose (2.00) from holding PT Bank Rakyat or give up 7.14% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
PT Bank Rakyat vs. Indofood CBP Sukses
Performance |
| Timeline |
| PT Bank Rakyat |
| Indofood CBP Sukses |
PT Bank and Indofood CBP Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PT Bank and Indofood CBP
The main advantage of trading using opposite PT Bank and Indofood CBP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PT Bank position performs unexpectedly, Indofood CBP 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 Indofood CBP will offset losses from the drop in Indofood CBP's long position.| PT Bank vs. Bank Mandiri Persero | PT Bank vs. Piraeus Bank SA | PT Bank vs. Eurobank Ergasias Services | PT Bank vs. Kasikornbank Public Co |
| Indofood CBP vs. Indofood Sukses Makmur | Indofood CBP vs. First Pacific | Indofood CBP vs. Grupo Herdez SAB | Indofood CBP vs. Fraser and Neave |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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