Correlation Between Indofood Cbp and Unilever Indonesia
Can any of the company-specific risk be diversified away by investing in both Indofood Cbp and Unilever 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 Unilever 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 Unilever Indonesia Tbk, you can compare the effects of market volatilities on Indofood Cbp and Unilever 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 Unilever Indonesia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Indofood Cbp and Unilever Indonesia.
Diversification Opportunities for Indofood Cbp and Unilever Indonesia
0.05 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Indofood and Unilever is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Indofood Cbp Sukses and Unilever Indonesia Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Unilever 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 Unilever Indonesia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Unilever Indonesia Tbk has no effect on the direction of Indofood Cbp i.e., Indofood Cbp and Unilever Indonesia go up and down completely randomly.
Pair Corralation between Indofood Cbp and Unilever Indonesia
Assuming the 90 days trading horizon Indofood Cbp Sukses is expected to generate 0.77 times more return on investment than Unilever Indonesia. However, Indofood Cbp Sukses is 1.29 times less risky than Unilever Indonesia. It trades about 0.03 of its potential returns per unit of risk. Unilever Indonesia Tbk is currently generating about -0.08 per unit of risk. If you would invest 981,476 in Indofood Cbp Sukses on August 28, 2024 and sell it today you would earn a total of 213,524 from holding Indofood Cbp Sukses or generate 21.76% 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. Unilever Indonesia Tbk
Performance |
| Timeline |
| Indofood Cbp Sukses |
| Unilever Indonesia Tbk |
Indofood Cbp and Unilever Indonesia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Indofood Cbp and Unilever Indonesia
The main advantage of trading using opposite Indofood Cbp and Unilever Indonesia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Indofood Cbp position performs unexpectedly, Unilever 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 Unilever Indonesia will offset losses from the drop in Unilever 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 |
| Unilever Indonesia vs. PT Indofood Sukses | Unilever Indonesia vs. Astra International Tbk | Unilever Indonesia vs. Telkom Indonesia Tbk | Unilever Indonesia vs. Bank Central Asia |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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