Correlation Between General Mills and PT Indofood
Can any of the company-specific risk be diversified away by investing in both General Mills 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 General Mills and PT Indofood into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Mills and PT Indofood Sukses, you can compare the effects of market volatilities on General Mills 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 General Mills with a short position of PT Indofood. Check out your portfolio center. Please also check ongoing floating volatility patterns of General Mills and PT Indofood.
Diversification Opportunities for General Mills and PT Indofood
-0.69 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between General and ISM is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding General Mills 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 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 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 General Mills i.e., General Mills and PT Indofood go up and down completely randomly.
Pair Corralation between General Mills and PT Indofood
Assuming the 90 days trading horizon General Mills is expected to generate 2.98 times less return on investment than PT Indofood. But when comparing it to its historical volatility, General Mills is 3.24 times less risky than PT Indofood. It trades about 0.04 of its potential returns per unit of risk. PT Indofood Sukses is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 36.00 in PT Indofood Sukses on August 25, 2024 and sell it today you would earn a total of 8.00 from holding PT Indofood Sukses or generate 22.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
General Mills vs. PT Indofood Sukses
Performance |
| Timeline |
| General Mills |
| PT Indofood Sukses |
General Mills and PT Indofood Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with General Mills and PT Indofood
The main advantage of trading using opposite General Mills and PT Indofood positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if General Mills 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.| General Mills vs. JJ SNACK FOODS | General Mills vs. SENECA FOODS A | General Mills vs. PENN NATL GAMING | General Mills vs. TROPHY GAMES DEV |
| PT Indofood vs. Superior Plus Corp | PT Indofood vs. NMI Holdings | PT Indofood vs. Origin Agritech | PT Indofood vs. SIVERS SEMICONDUCTORS AB |
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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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