Correlation Between PT Indofood and Bank Rakyat
Can any of the company-specific risk be diversified away by investing in both PT Indofood and Bank Rakyat 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 PT Indofood and Bank Rakyat into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PT Indofood Sukses and Bank Rakyat Indonesia, you can compare the effects of market volatilities on PT Indofood and Bank Rakyat 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 PT Indofood with a short position of Bank Rakyat. Check out your portfolio center. Please also check ongoing floating volatility patterns of PT Indofood and Bank Rakyat.
Diversification Opportunities for PT Indofood and Bank Rakyat
-0.63 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between INDF and Bank is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding PT Indofood Sukses and Bank Rakyat Indonesia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bank Rakyat Indonesia and PT Indofood 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 PT Indofood Sukses are associated (or correlated) with Bank Rakyat. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bank Rakyat Indonesia has no effect on the direction of PT Indofood i.e., PT Indofood and Bank Rakyat go up and down completely randomly.
Pair Corralation between PT Indofood and Bank Rakyat
Assuming the 90 days trading horizon PT Indofood Sukses is expected to generate 0.49 times more return on investment than Bank Rakyat. However, PT Indofood Sukses is 2.02 times less risky than Bank Rakyat. It trades about 0.04 of its potential returns per unit of risk. Bank Rakyat Indonesia is currently generating about -0.03 per unit of risk. If you would invest 625,959 in PT Indofood Sukses on September 1, 2024 and sell it today you would earn a total of 129,041 from holding PT Indofood Sukses or generate 20.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
PT Indofood Sukses vs. Bank Rakyat Indonesia
Performance |
| Timeline |
| PT Indofood Sukses |
| Bank Rakyat Indonesia |
PT Indofood and Bank Rakyat Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PT Indofood and Bank Rakyat
The main advantage of trading using opposite PT Indofood and Bank Rakyat positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PT Indofood position performs unexpectedly, Bank Rakyat 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 Bank Rakyat will offset losses from the drop in Bank Rakyat's long position.| PT Indofood vs. Bank BRISyariah Tbk | PT Indofood vs. Mitra Pinasthika Mustika | PT Indofood vs. Jakarta Int Hotels | PT Indofood vs. Indosterling Technomedia Tbk |
| Bank Rakyat vs. Bank BRISyariah Tbk | Bank Rakyat vs. Ace Hardware Indonesia | Bank Rakyat vs. Merdeka Copper Gold | Bank Rakyat vs. Mitra Pinasthika Mustika |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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