Correlation Between Indofood Cbp and Langgeng Makmur
Can any of the company-specific risk be diversified away by investing in both Indofood Cbp and Langgeng Makmur 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 Langgeng Makmur 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 Langgeng Makmur Industri, you can compare the effects of market volatilities on Indofood Cbp and Langgeng Makmur 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 Langgeng Makmur. Check out your portfolio center. Please also check ongoing floating volatility patterns of Indofood Cbp and Langgeng Makmur.
Diversification Opportunities for Indofood Cbp and Langgeng Makmur
0.09 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Indofood and Langgeng is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Indofood Cbp Sukses and Langgeng Makmur Industri in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Langgeng Makmur Industri 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 Langgeng Makmur. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Langgeng Makmur Industri has no effect on the direction of Indofood Cbp i.e., Indofood Cbp and Langgeng Makmur go up and down completely randomly.
Pair Corralation between Indofood Cbp and Langgeng Makmur
Assuming the 90 days trading horizon Indofood Cbp is expected to generate 3.11 times less return on investment than Langgeng Makmur. But when comparing it to its historical volatility, Indofood Cbp Sukses is 3.2 times less risky than Langgeng Makmur. It trades about 0.04 of its potential returns per unit of risk. Langgeng Makmur Industri is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 11,300 in Langgeng Makmur Industri on September 3, 2024 and sell it today you would earn a total of 2,500 from holding Langgeng Makmur Industri or generate 22.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Indofood Cbp Sukses vs. Langgeng Makmur Industri
Performance |
| Timeline |
| Indofood Cbp Sukses |
| Langgeng Makmur Industri |
Indofood Cbp and Langgeng Makmur Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Indofood Cbp and Langgeng Makmur
The main advantage of trading using opposite Indofood Cbp and Langgeng Makmur positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Indofood Cbp position performs unexpectedly, Langgeng Makmur 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 Langgeng Makmur will offset losses from the drop in Langgeng Makmur's long position.| Indofood Cbp vs. Astra International Tbk | Indofood Cbp vs. Unilever Indonesia Tbk | Indofood Cbp vs. Telkom Indonesia Tbk | Indofood Cbp vs. Bank Mandiri Persero |
| Langgeng Makmur vs. Kedaung Indah Can | Langgeng Makmur vs. Kedawung Setia Industrial | Langgeng Makmur vs. Mustika Ratu Tbk | Langgeng Makmur vs. Pyridam Farma 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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