Correlation Between Indofood Cbp and Metrodata Electronics
Can any of the company-specific risk be diversified away by investing in both Indofood Cbp and Metrodata Electronics 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 Metrodata Electronics 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 Metrodata Electronics Tbk, you can compare the effects of market volatilities on Indofood Cbp and Metrodata Electronics 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 Metrodata Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Indofood Cbp and Metrodata Electronics.
Diversification Opportunities for Indofood Cbp and Metrodata Electronics
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Indofood and Metrodata is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Indofood Cbp Sukses and Metrodata Electronics Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Metrodata Electronics 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 Metrodata Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Metrodata Electronics Tbk has no effect on the direction of Indofood Cbp i.e., Indofood Cbp and Metrodata Electronics go up and down completely randomly.
Pair Corralation between Indofood Cbp and Metrodata Electronics
Assuming the 90 days trading horizon Indofood Cbp is expected to generate 1.72 times less return on investment than Metrodata Electronics. But when comparing it to its historical volatility, Indofood Cbp Sukses is 1.16 times less risky than Metrodata Electronics. It trades about 0.04 of its potential returns per unit of risk. Metrodata Electronics Tbk is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 48,639 in Metrodata Electronics Tbk on September 4, 2024 and sell it today you would earn a total of 13,361 from holding Metrodata Electronics Tbk or generate 27.47% 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. Metrodata Electronics Tbk
Performance |
| Timeline |
| Indofood Cbp Sukses |
| Metrodata Electronics Tbk |
Indofood Cbp and Metrodata Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Indofood Cbp and Metrodata Electronics
The main advantage of trading using opposite Indofood Cbp and Metrodata Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Indofood Cbp position performs unexpectedly, Metrodata Electronics 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 Metrodata Electronics will offset losses from the drop in Metrodata Electronics' long position.| Indofood Cbp vs. Unilever Indonesia Tbk | Indofood Cbp vs. PT Indofood Sukses | Indofood Cbp vs. Astra International Tbk | Indofood Cbp vs. Telkom Indonesia Tbk |
| Metrodata Electronics vs. Astra Graphia Tbk | Metrodata Electronics vs. Mitra Pinasthika Mustika | Metrodata Electronics vs. Jakarta Int Hotels | Metrodata Electronics vs. Asuransi Harta Aman |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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