Correlation Between Fast Food and Sumber Alfaria
Can any of the company-specific risk be diversified away by investing in both Fast Food and Sumber Alfaria 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 Fast Food and Sumber Alfaria into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fast Food Indonesia and Sumber Alfaria Trijaya, you can compare the effects of market volatilities on Fast Food and Sumber Alfaria 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 Fast Food with a short position of Sumber Alfaria. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fast Food and Sumber Alfaria.
Diversification Opportunities for Fast Food and Sumber Alfaria
0.28 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Fast and Sumber is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Fast Food Indonesia and Sumber Alfaria Trijaya in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sumber Alfaria Trijaya and Fast 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 Fast Food Indonesia are associated (or correlated) with Sumber Alfaria. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sumber Alfaria Trijaya has no effect on the direction of Fast Food i.e., Fast Food and Sumber Alfaria go up and down completely randomly.
Pair Corralation between Fast Food and Sumber Alfaria
Assuming the 90 days trading horizon Fast Food Indonesia is expected to under-perform the Sumber Alfaria. In addition to that, Fast Food is 1.37 times more volatile than Sumber Alfaria Trijaya. It trades about -0.41 of its total potential returns per unit of risk. Sumber Alfaria Trijaya is currently generating about -0.39 per unit of volatility. If you would invest 357,000 in Sumber Alfaria Trijaya on August 29, 2024 and sell it today you would lose (66,000) from holding Sumber Alfaria Trijaya or give up 18.49% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fast Food Indonesia vs. Sumber Alfaria Trijaya
Performance |
| Timeline |
| Fast Food Indonesia |
| Sumber Alfaria Trijaya |
Fast Food and Sumber Alfaria Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fast Food and Sumber Alfaria
The main advantage of trading using opposite Fast Food and Sumber Alfaria positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fast Food position performs unexpectedly, Sumber Alfaria 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 Sumber Alfaria will offset losses from the drop in Sumber Alfaria's long position.| Fast Food vs. Hero Supermarket Tbk | Fast Food vs. Indoritel Makmur Internasional | Fast Food vs. Enseval Putra Megatrading | Fast Food vs. Fks Multi Agro |
| Sumber Alfaria vs. Elang Mahkota Teknologi | Sumber Alfaria vs. Ace Hardware Indonesia | Sumber Alfaria vs. BFI Finance Indonesia | Sumber Alfaria vs. Tower Bersama Infrastructure |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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