Correlation Between Garudafood Putra and PT Indofood
Can any of the company-specific risk be diversified away by investing in both Garudafood Putra 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 Garudafood Putra and PT Indofood into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Garudafood Putra Putri and PT Indofood Sukses, you can compare the effects of market volatilities on Garudafood Putra 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 Garudafood Putra with a short position of PT Indofood. Check out your portfolio center. Please also check ongoing floating volatility patterns of Garudafood Putra and PT Indofood.
Diversification Opportunities for Garudafood Putra and PT Indofood
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Garudafood and INDF is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Garudafood Putra Putri 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 Garudafood Putra 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 Garudafood Putra Putri 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 Garudafood Putra i.e., Garudafood Putra and PT Indofood go up and down completely randomly.
Pair Corralation between Garudafood Putra and PT Indofood
Assuming the 90 days trading horizon Garudafood Putra Putri is expected to under-perform the PT Indofood. In addition to that, Garudafood Putra is 1.48 times more volatile than PT Indofood Sukses. It trades about -0.08 of its total potential returns per unit of risk. PT Indofood Sukses is currently generating about 0.03 per unit of volatility. If you would invest 757,500 in PT Indofood Sukses on August 30, 2024 and sell it today you would earn a total of 7,500 from holding PT Indofood Sukses or generate 0.99% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Garudafood Putra Putri vs. PT Indofood Sukses
Performance |
| Timeline |
| Garudafood Putra Putri |
| PT Indofood Sukses |
Garudafood Putra and PT Indofood Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Garudafood Putra and PT Indofood
The main advantage of trading using opposite Garudafood Putra and PT Indofood positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Garudafood Putra 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.| Garudafood Putra vs. Sariguna Primatirta PT | Garudafood Putra vs. Ultra Jaya Milk | Garudafood Putra vs. Nippon Indosari Corpindo | Garudafood Putra vs. Kino Indonesia 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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