Correlation Between Indofood Cbp and Bank Central
Can any of the company-specific risk be diversified away by investing in both Indofood Cbp and Bank Central 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 Bank Central 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 Bank Central Asia, you can compare the effects of market volatilities on Indofood Cbp and Bank Central 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 Bank Central. Check out your portfolio center. Please also check ongoing floating volatility patterns of Indofood Cbp and Bank Central.
Diversification Opportunities for Indofood Cbp and Bank Central
0.49 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Indofood and Bank is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Indofood Cbp Sukses and Bank Central Asia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bank Central Asia 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 Bank Central. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bank Central Asia has no effect on the direction of Indofood Cbp i.e., Indofood Cbp and Bank Central go up and down completely randomly.
Pair Corralation between Indofood Cbp and Bank Central
Assuming the 90 days trading horizon Indofood Cbp Sukses is expected to generate 1.18 times more return on investment than Bank Central. However, Indofood Cbp is 1.18 times more volatile than Bank Central Asia. It trades about 0.06 of its potential returns per unit of risk. Bank Central Asia is currently generating about -0.01 per unit of risk. If you would invest 1,140,000 in Indofood Cbp Sukses on August 28, 2024 and sell it today you would earn a total of 55,000 from holding Indofood Cbp Sukses or generate 4.82% 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. Bank Central Asia
Performance |
| Timeline |
| Indofood Cbp Sukses |
| Bank Central Asia |
Indofood Cbp and Bank Central Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Indofood Cbp and Bank Central
The main advantage of trading using opposite Indofood Cbp and Bank Central positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Indofood Cbp position performs unexpectedly, Bank Central 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 Bank Central will offset losses from the drop in Bank Central'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 |
| Bank Central vs. Bank Rakyat Indonesia | Bank Central vs. Bank Mandiri Persero | Bank Central vs. Bank Negara Indonesia | Bank Central vs. Astra International 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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