Correlation Between PT Indofood and Fortune Indonesia
Can any of the company-specific risk be diversified away by investing in both PT Indofood and Fortune 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 PT Indofood and Fortune Indonesia 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 Fortune Indonesia Tbk, you can compare the effects of market volatilities on PT Indofood and Fortune 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 PT Indofood with a short position of Fortune Indonesia. Check out your portfolio center. Please also check ongoing floating volatility patterns of PT Indofood and Fortune Indonesia.
Diversification Opportunities for PT Indofood and Fortune Indonesia
0.28 | Correlation Coefficient |
Modest diversification
The 3 months correlation between INDF and Fortune is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding PT Indofood Sukses and Fortune Indonesia Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fortune Indonesia Tbk 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 Fortune Indonesia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fortune Indonesia Tbk has no effect on the direction of PT Indofood i.e., PT Indofood and Fortune Indonesia go up and down completely randomly.
Pair Corralation between PT Indofood and Fortune Indonesia
Assuming the 90 days trading horizon PT Indofood is expected to generate 11.42 times less return on investment than Fortune Indonesia. But when comparing it to its historical volatility, PT Indofood Sukses is 4.71 times less risky than Fortune Indonesia. It trades about 0.06 of its potential returns per unit of risk. Fortune Indonesia Tbk is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 17,100 in Fortune Indonesia Tbk on November 27, 2024 and sell it today you would earn a total of 324,900 from holding Fortune Indonesia Tbk or generate 1900.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.55% |
| Values | Daily Returns |
PT Indofood Sukses vs. Fortune Indonesia Tbk
Performance |
| Timeline |
| PT Indofood Sukses |
| Fortune Indonesia Tbk |
PT Indofood and Fortune Indonesia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PT Indofood and Fortune Indonesia
The main advantage of trading using opposite PT Indofood and Fortune Indonesia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PT Indofood position performs unexpectedly, Fortune 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 Fortune Indonesia will offset losses from the drop in Fortune Indonesia'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 |
| Fortune Indonesia vs. Gema Grahasarana Tbk | Fortune Indonesia vs. Bayu Buana Tbk | Fortune Indonesia vs. Fast Food Indonesia | Fortune Indonesia vs. Mahaka Media Tbk |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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