Correlation Between Indofood Cbp and Telkom Indonesia
Can any of the company-specific risk be diversified away by investing in both Indofood Cbp and Telkom Indonesia 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 Telkom Indonesia 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 Telkom Indonesia Tbk, you can compare the effects of market volatilities on Indofood Cbp and Telkom Indonesia 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 Telkom Indonesia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Indofood Cbp and Telkom Indonesia.
Diversification Opportunities for Indofood Cbp and Telkom Indonesia
0.01 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Indofood and Telkom is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Indofood Cbp Sukses and Telkom Indonesia Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Telkom Indonesia 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 Telkom Indonesia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Telkom Indonesia Tbk has no effect on the direction of Indofood Cbp i.e., Indofood Cbp and Telkom Indonesia go up and down completely randomly.
Pair Corralation between Indofood Cbp and Telkom Indonesia
Assuming the 90 days trading horizon Indofood Cbp Sukses is expected to generate 1.06 times more return on investment than Telkom Indonesia. However, Indofood Cbp is 1.06 times more volatile than Telkom Indonesia Tbk. It trades about 0.03 of its potential returns per unit of risk. Telkom Indonesia Tbk is currently generating about -0.02 per unit of risk. If you would invest 995,944 in Indofood Cbp Sukses on August 28, 2024 and sell it today you would earn a total of 199,056 from holding Indofood Cbp Sukses or generate 19.99% 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. Telkom Indonesia Tbk
Performance |
| Timeline |
| Indofood Cbp Sukses |
| Telkom Indonesia Tbk |
Indofood Cbp and Telkom Indonesia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Indofood Cbp and Telkom Indonesia
The main advantage of trading using opposite Indofood Cbp and Telkom Indonesia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Indofood Cbp position performs unexpectedly, Telkom Indonesia 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 Telkom Indonesia will offset losses from the drop in Telkom Indonesia's 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 |
| Telkom Indonesia vs. Mnc Land Tbk | Telkom Indonesia vs. MNC Vision Networks | Telkom Indonesia vs. Medikaloka Hermina PT |
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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