Correlation Between Indofood Cbp and Bank Negara
Can any of the company-specific risk be diversified away by investing in both Indofood Cbp and Bank Negara 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 Negara 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 Negara Indonesia, you can compare the effects of market volatilities on Indofood Cbp and Bank Negara 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 Negara. Check out your portfolio center. Please also check ongoing floating volatility patterns of Indofood Cbp and Bank Negara.
Diversification Opportunities for Indofood Cbp and Bank Negara
0.16 | Correlation Coefficient |
Average diversification
The 3 months correlation between Indofood and Bank is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Indofood Cbp Sukses and Bank Negara Indonesia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bank Negara Indonesia 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 Negara. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bank Negara Indonesia has no effect on the direction of Indofood Cbp i.e., Indofood Cbp and Bank Negara go up and down completely randomly.
Pair Corralation between Indofood Cbp and Bank Negara
Assuming the 90 days trading horizon Indofood Cbp is expected to generate 5.26 times less return on investment than Bank Negara. But when comparing it to its historical volatility, Indofood Cbp Sukses is 3.85 times less risky than Bank Negara. It trades about 0.02 of its potential returns per unit of risk. Bank Negara Indonesia is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 439,020 in Bank Negara Indonesia on August 31, 2024 and sell it today you would earn a total of 58,980 from holding Bank Negara Indonesia or generate 13.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.72% |
| Values | Daily Returns |
Indofood Cbp Sukses vs. Bank Negara Indonesia
Performance |
| Timeline |
| Indofood Cbp Sukses |
| Bank Negara Indonesia |
Indofood Cbp and Bank Negara Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Indofood Cbp and Bank Negara
The main advantage of trading using opposite Indofood Cbp and Bank Negara positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Indofood Cbp position performs unexpectedly, Bank Negara 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 Negara will offset losses from the drop in Bank Negara's long position.| Indofood Cbp vs. Bank BRISyariah Tbk | Indofood Cbp vs. Mitra Pinasthika Mustika | Indofood Cbp vs. Jakarta Int Hotels | Indofood Cbp vs. Indosterling Technomedia Tbk |
| Bank Negara vs. Bank BRISyariah Tbk | Bank Negara vs. Ace Hardware Indonesia | Bank Negara vs. Merdeka Copper Gold | Bank Negara vs. Mitra Pinasthika Mustika |
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.
Other Complementary Tools
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation | |
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk | |
| Top Crypto Exchanges Search and analyze digital assets across top global cryptocurrency exchanges | |
| Volatility Analysis Get historical volatility and risk analysis based on latest market data | |
| Technical Analysis Check basic technical indicators and analysis based on most latest market data |