Correlation Between Sentra Food and PT Indofood
Can any of the company-specific risk be diversified away by investing in both Sentra Food 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 Sentra Food and PT Indofood into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sentra Food Indonesia and PT Indofood Sukses, you can compare the effects of market volatilities on Sentra Food 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 Sentra Food with a short position of PT Indofood. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sentra Food and PT Indofood.
Diversification Opportunities for Sentra Food and PT Indofood
-0.32 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Sentra and INDF is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Sentra Food 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 Sentra 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 Sentra Food 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 Sentra Food i.e., Sentra Food and PT Indofood go up and down completely randomly.
Pair Corralation between Sentra Food and PT Indofood
Assuming the 90 days trading horizon Sentra Food Indonesia is expected to under-perform the PT Indofood. But the stock apears to be less risky and, when comparing its historical volatility, Sentra Food Indonesia is 1.86 times less risky than PT Indofood. The stock trades about -0.08 of its potential returns per unit of risk. The PT Indofood Sukses is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 730,000 in PT Indofood Sukses on September 2, 2024 and sell it today you would earn a total of 25,000 from holding PT Indofood Sukses or generate 3.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sentra Food Indonesia vs. PT Indofood Sukses
Performance |
| Timeline |
| Sentra Food Indonesia |
| PT Indofood Sukses |
Sentra Food and PT Indofood Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sentra Food and PT Indofood
The main advantage of trading using opposite Sentra Food and PT Indofood positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sentra Food 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.| Sentra Food vs. Garudafood Putra Putri | Sentra Food vs. Estika Tata Tiara | Sentra Food vs. Campina Ice Cream | Sentra Food vs. PT Wahana Interfood |
| 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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