Correlation Between Indofood Cbp and Fast Food
Can any of the company-specific risk be diversified away by investing in both Indofood Cbp and Fast Food 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 Fast Food 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 Fast Food Indonesia, you can compare the effects of market volatilities on Indofood Cbp and Fast Food 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 Fast Food. Check out your portfolio center. Please also check ongoing floating volatility patterns of Indofood Cbp and Fast Food.
Diversification Opportunities for Indofood Cbp and Fast Food
0.06 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Indofood and Fast is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Indofood Cbp Sukses and Fast Food Indonesia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fast Food 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 Fast Food. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fast Food Indonesia has no effect on the direction of Indofood Cbp i.e., Indofood Cbp and Fast Food go up and down completely randomly.
Pair Corralation between Indofood Cbp and Fast Food
Assuming the 90 days trading horizon Indofood Cbp Sukses is expected to generate 0.67 times more return on investment than Fast Food. However, Indofood Cbp Sukses is 1.49 times less risky than Fast Food. It trades about 0.02 of its potential returns per unit of risk. Fast Food Indonesia is currently generating about -0.08 per unit of risk. If you would invest 1,089,993 in Indofood Cbp Sukses on August 31, 2024 and sell it today you would earn a total of 100,007 from holding Indofood Cbp Sukses or generate 9.18% 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. Fast Food Indonesia
Performance |
| Timeline |
| Indofood Cbp Sukses |
| Fast Food Indonesia |
Indofood Cbp and Fast Food Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Indofood Cbp and Fast Food
The main advantage of trading using opposite Indofood Cbp and Fast Food positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Indofood Cbp position performs unexpectedly, Fast Food 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 Fast Food will offset losses from the drop in Fast Food'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 |
| Fast Food vs. Japfa Comfeed Indonesia | Fast Food vs. Charoen Pokphand Indonesia | Fast Food vs. Erajaya Swasembada Tbk | Fast Food vs. Indofood Cbp Sukses |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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