Correlation Between PT Indofood and Estika Tata
Can any of the company-specific risk be diversified away by investing in both PT Indofood and Estika Tata 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 Estika Tata 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 Estika Tata Tiara, you can compare the effects of market volatilities on PT Indofood and Estika Tata 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 Estika Tata. Check out your portfolio center. Please also check ongoing floating volatility patterns of PT Indofood and Estika Tata.
Diversification Opportunities for PT Indofood and Estika Tata
-0.61 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between INDF and Estika is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding PT Indofood Sukses and Estika Tata Tiara in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Estika Tata Tiara 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 Estika Tata. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Estika Tata Tiara has no effect on the direction of PT Indofood i.e., PT Indofood and Estika Tata go up and down completely randomly.
Pair Corralation between PT Indofood and Estika Tata
Assuming the 90 days trading horizon PT Indofood is expected to generate 7.1 times less return on investment than Estika Tata. But when comparing it to its historical volatility, PT Indofood Sukses is 3.4 times less risky than Estika Tata. It trades about 0.03 of its potential returns per unit of risk. Estika Tata Tiara is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 6,947 in Estika Tata Tiara on September 2, 2024 and sell it today you would earn a total of 4,753 from holding Estika Tata Tiara or generate 68.42% 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. Estika Tata Tiara
Performance |
| Timeline |
| PT Indofood Sukses |
| Estika Tata Tiara |
PT Indofood and Estika Tata Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PT Indofood and Estika Tata
The main advantage of trading using opposite PT Indofood and Estika Tata positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PT Indofood position performs unexpectedly, Estika Tata 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 Estika Tata will offset losses from the drop in Estika Tata's long position.| PT Indofood vs. Astra International Tbk | PT Indofood vs. Unilever Indonesia Tbk | PT Indofood vs. Telkom Indonesia Tbk | PT Indofood vs. Bank Mandiri Persero |
| Estika Tata vs. Sentra Food Indonesia | Estika Tata vs. Buyung Poetra Sembada | Estika Tata vs. Garudafood Putra Putri | Estika Tata vs. Campina Ice Cream |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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