Correlation Between Indofood Cbp and Austindo Nusantara
Can any of the company-specific risk be diversified away by investing in both Indofood Cbp and Austindo Nusantara 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 Indofood Cbp and Austindo Nusantara into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Indofood Cbp Sukses and Austindo Nusantara Jaya, you can compare the effects of market volatilities on Indofood Cbp and Austindo Nusantara 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 Indofood Cbp with a short position of Austindo Nusantara. Check out your portfolio center. Please also check ongoing floating volatility patterns of Indofood Cbp and Austindo Nusantara.
Diversification Opportunities for Indofood Cbp and Austindo Nusantara
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Indofood and Austindo is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Indofood Cbp Sukses and Austindo Nusantara Jaya in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Austindo Nusantara Jaya and Indofood Cbp 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 Indofood Cbp Sukses are associated (or correlated) with Austindo Nusantara. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Austindo Nusantara Jaya has no effect on the direction of Indofood Cbp i.e., Indofood Cbp and Austindo Nusantara go up and down completely randomly.
Pair Corralation between Indofood Cbp and Austindo Nusantara
Assuming the 90 days trading horizon Indofood Cbp is expected to generate 1.65 times less return on investment than Austindo Nusantara. In addition to that, Indofood Cbp is 1.21 times more volatile than Austindo Nusantara Jaya. It trades about 0.04 of its total potential returns per unit of risk. Austindo Nusantara Jaya is currently generating about 0.09 per unit of volatility. If you would invest 69,000 in Austindo Nusantara Jaya on September 2, 2024 and sell it today you would earn a total of 4,500 from holding Austindo Nusantara Jaya or generate 6.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Indofood Cbp Sukses vs. Austindo Nusantara Jaya
Performance |
| Timeline |
| Indofood Cbp Sukses |
| Austindo Nusantara Jaya |
Indofood Cbp and Austindo Nusantara Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Indofood Cbp and Austindo Nusantara
The main advantage of trading using opposite Indofood Cbp and Austindo Nusantara positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Indofood Cbp position performs unexpectedly, Austindo Nusantara 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 Austindo Nusantara will offset losses from the drop in Austindo Nusantara's long position.| Indofood Cbp vs. Unilever Indonesia Tbk | Indofood Cbp vs. PT Indofood Sukses | Indofood Cbp vs. Astra International Tbk | Indofood Cbp vs. Telkom Indonesia Tbk |
| Austindo Nusantara vs. Bank BRISyariah Tbk | Austindo Nusantara vs. Mitra Pinasthika Mustika | Austindo Nusantara vs. Jakarta Int Hotels | Austindo Nusantara vs. Indosterling Technomedia Tbk |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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