Correlation Between PT Indofood and Gudang Garam
Can any of the company-specific risk be diversified away by investing in both PT Indofood and Gudang Garam 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 Gudang Garam 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 Gudang Garam Tbk, you can compare the effects of market volatilities on PT Indofood and Gudang Garam 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 Gudang Garam. Check out your portfolio center. Please also check ongoing floating volatility patterns of PT Indofood and Gudang Garam.
Diversification Opportunities for PT Indofood and Gudang Garam
-0.86 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between INDF and Gudang is -0.86. Overlapping area represents the amount of risk that can be diversified away by holding PT Indofood Sukses and Gudang Garam Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gudang Garam 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 Gudang Garam. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gudang Garam Tbk has no effect on the direction of PT Indofood i.e., PT Indofood and Gudang Garam go up and down completely randomly.
Pair Corralation between PT Indofood and Gudang Garam
Assuming the 90 days trading horizon PT Indofood Sukses is expected to generate 1.58 times more return on investment than Gudang Garam. However, PT Indofood is 1.58 times more volatile than Gudang Garam Tbk. It trades about 0.0 of its potential returns per unit of risk. Gudang Garam Tbk is currently generating about -0.49 per unit of risk. If you would invest 752,500 in PT Indofood Sukses on August 27, 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 Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
PT Indofood Sukses vs. Gudang Garam Tbk
Performance |
| Timeline |
| PT Indofood Sukses |
| Gudang Garam Tbk |
PT Indofood and Gudang Garam Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PT Indofood and Gudang Garam
The main advantage of trading using opposite PT Indofood and Gudang Garam positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PT Indofood position performs unexpectedly, Gudang Garam 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 Gudang Garam will offset losses from the drop in Gudang Garam'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 |
| Gudang Garam vs. Hanjaya Mandala Sampoerna | Gudang Garam vs. Unilever Indonesia Tbk | Gudang Garam vs. PT Indofood Sukses | Gudang Garam vs. United Tractors 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 Transaction History module to view history of all your transactions and understand their impact on performance.
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