Correlation Between Indofood Cbp and Lotte Chemical
Can any of the company-specific risk be diversified away by investing in both Indofood Cbp and Lotte Chemical 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 Lotte Chemical 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 Lotte Chemical Titan, you can compare the effects of market volatilities on Indofood Cbp and Lotte Chemical 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 Lotte Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Indofood Cbp and Lotte Chemical.
Diversification Opportunities for Indofood Cbp and Lotte Chemical
0.52 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Indofood and Lotte is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Indofood Cbp Sukses and Lotte Chemical Titan in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lotte Chemical Titan 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 Lotte Chemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lotte Chemical Titan has no effect on the direction of Indofood Cbp i.e., Indofood Cbp and Lotte Chemical go up and down completely randomly.
Pair Corralation between Indofood Cbp and Lotte Chemical
Assuming the 90 days trading horizon Indofood Cbp Sukses is expected to generate 1.34 times more return on investment than Lotte Chemical. However, Indofood Cbp is 1.34 times more volatile than Lotte Chemical Titan. It trades about -0.13 of its potential returns per unit of risk. Lotte Chemical Titan is currently generating about -0.18 per unit of risk. If you would invest 1,257,500 in Indofood Cbp Sukses on August 30, 2024 and sell it today you would lose (60,000) from holding Indofood Cbp Sukses or give up 4.77% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Indofood Cbp Sukses vs. Lotte Chemical Titan
Performance |
| Timeline |
| Indofood Cbp Sukses |
| Lotte Chemical Titan |
Indofood Cbp and Lotte Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Indofood Cbp and Lotte Chemical
The main advantage of trading using opposite Indofood Cbp and Lotte Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Indofood Cbp position performs unexpectedly, Lotte Chemical 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 Lotte Chemical will offset losses from the drop in Lotte Chemical's long position.| Indofood Cbp vs. Bakrieland Development Tbk | Indofood Cbp vs. Bakrie Brothers Tbk | Indofood Cbp vs. Energi Mega Persada | Indofood Cbp vs. Sampoerna Agro Tbk |
| Lotte Chemical vs. Champion Pacific Indonesia | Lotte Chemical vs. Argha Karya Prima | Lotte Chemical vs. Asiaplast Industries Tbk | Lotte Chemical vs. Intanwijaya Internasional 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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