Correlation Between General Mills and Indofood CBP
Can any of the company-specific risk be diversified away by investing in both General Mills 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 General Mills and Indofood CBP into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Mills and Indofood CBP Sukses, you can compare the effects of market volatilities on General Mills 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 General Mills with a short position of Indofood CBP. Check out your portfolio center. Please also check ongoing floating volatility patterns of General Mills and Indofood CBP.
Diversification Opportunities for General Mills and Indofood CBP
-0.9 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between General and Indofood is -0.9. Overlapping area represents the amount of risk that can be diversified away by holding General Mills 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 General Mills 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 General Mills 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 General Mills i.e., General Mills and Indofood CBP go up and down completely randomly.
Pair Corralation between General Mills and Indofood CBP
Considering the 90-day investment horizon General Mills is expected to generate 0.48 times more return on investment than Indofood CBP. However, General Mills is 2.08 times less risky than Indofood CBP. It trades about 0.1 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 6,410 in General Mills on September 12, 2024 and sell it today you would earn a total of 140.00 from holding General Mills or generate 2.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 95.65% |
| Values | Daily Returns |
General Mills vs. Indofood CBP Sukses
Performance |
| Timeline |
| General Mills |
| Indofood CBP Sukses |
General Mills and Indofood CBP Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with General Mills and Indofood CBP
The main advantage of trading using opposite General Mills and Indofood CBP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if General Mills 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.| General Mills vs. Campbell Soup | General Mills vs. Kraft Heinz Co | General Mills vs. ConAgra Foods | General Mills vs. Hormel Foods |
| 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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