Correlation Between Indofood Cbp and Mitra Adiperkasa
Can any of the company-specific risk be diversified away by investing in both Indofood Cbp and Mitra Adiperkasa 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 Mitra Adiperkasa 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 Mitra Adiperkasa Tbk, you can compare the effects of market volatilities on Indofood Cbp and Mitra Adiperkasa 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 Mitra Adiperkasa. Check out your portfolio center. Please also check ongoing floating volatility patterns of Indofood Cbp and Mitra Adiperkasa.
Diversification Opportunities for Indofood Cbp and Mitra Adiperkasa
0.52 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Indofood and Mitra is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Indofood Cbp Sukses and Mitra Adiperkasa Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mitra Adiperkasa Tbk 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 Mitra Adiperkasa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mitra Adiperkasa Tbk has no effect on the direction of Indofood Cbp i.e., Indofood Cbp and Mitra Adiperkasa go up and down completely randomly.
Pair Corralation between Indofood Cbp and Mitra Adiperkasa
Assuming the 90 days trading horizon Indofood Cbp Sukses is expected to under-perform the Mitra Adiperkasa. But the stock apears to be less risky and, when comparing its historical volatility, Indofood Cbp Sukses is 2.28 times less risky than Mitra Adiperkasa. The stock trades about -0.1 of its potential returns per unit of risk. The Mitra Adiperkasa Tbk is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 155,000 in Mitra Adiperkasa Tbk on September 3, 2024 and sell it today you would earn a total of 2,500 from holding Mitra Adiperkasa Tbk or generate 1.61% 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. Mitra Adiperkasa Tbk
Performance |
| Timeline |
| Indofood Cbp Sukses |
| Mitra Adiperkasa Tbk |
Indofood Cbp and Mitra Adiperkasa Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Indofood Cbp and Mitra Adiperkasa
The main advantage of trading using opposite Indofood Cbp and Mitra Adiperkasa positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Indofood Cbp position performs unexpectedly, Mitra Adiperkasa 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 Mitra Adiperkasa will offset losses from the drop in Mitra Adiperkasa'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 |
| Mitra Adiperkasa vs. Ramayana Lestari Sentosa | Mitra Adiperkasa vs. Ace Hardware Indonesia | Mitra Adiperkasa vs. Summarecon Agung Tbk | Mitra Adiperkasa vs. Media Nusantara Citra |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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