Correlation Between PT Indofood and Fks Multi
Can any of the company-specific risk be diversified away by investing in both PT Indofood and Fks Multi 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 Fks Multi 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 Fks Multi Agro, you can compare the effects of market volatilities on PT Indofood and Fks Multi 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 Fks Multi. Check out your portfolio center. Please also check ongoing floating volatility patterns of PT Indofood and Fks Multi.
Diversification Opportunities for PT Indofood and Fks Multi
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between INDF and Fks is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding PT Indofood Sukses and Fks Multi Agro in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fks Multi Agro 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 Fks Multi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fks Multi Agro has no effect on the direction of PT Indofood i.e., PT Indofood and Fks Multi go up and down completely randomly.
Pair Corralation between PT Indofood and Fks Multi
Assuming the 90 days trading horizon PT Indofood Sukses is expected to generate 15.41 times more return on investment than Fks Multi. However, PT Indofood is 15.41 times more volatile than Fks Multi Agro. It trades about 0.0 of its potential returns per unit of risk. Fks Multi Agro is currently generating about -0.31 per unit of risk. If you would invest 752,500 in PT Indofood Sukses on August 25, 2024 and sell it today you would lose (5,000) from holding PT Indofood Sukses or give up 0.66% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
PT Indofood Sukses vs. Fks Multi Agro
Performance |
| Timeline |
| PT Indofood Sukses |
| Fks Multi Agro |
PT Indofood and Fks Multi Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PT Indofood and Fks Multi
The main advantage of trading using opposite PT Indofood and Fks Multi positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PT Indofood position performs unexpectedly, Fks Multi 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 Fks Multi will offset losses from the drop in Fks Multi'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 |
| Fks Multi vs. Charoen Pokphand Indonesia | Fks Multi vs. Kalbe Farma Tbk | Fks Multi vs. Indofood Cbp Sukses | Fks Multi vs. PT Indofood Sukses |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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