Correlation Between PT Indofood and Lima Dua
Can any of the company-specific risk be diversified away by investing in both PT Indofood and Lima Dua 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 Lima Dua 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 Lima Dua Lima, you can compare the effects of market volatilities on PT Indofood and Lima Dua 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 Lima Dua. Check out your portfolio center. Please also check ongoing floating volatility patterns of PT Indofood and Lima Dua.
Diversification Opportunities for PT Indofood and Lima Dua
-0.25 | Correlation Coefficient |
Very good diversification
The 3 months correlation between INDF and Lima is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding PT Indofood Sukses and Lima Dua Lima in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lima Dua Lima 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 Lima Dua. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lima Dua Lima has no effect on the direction of PT Indofood i.e., PT Indofood and Lima Dua go up and down completely randomly.
Pair Corralation between PT Indofood and Lima Dua
Assuming the 90 days trading horizon PT Indofood Sukses is expected to generate 0.49 times more return on investment than Lima Dua. However, PT Indofood Sukses is 2.03 times less risky than Lima Dua. It trades about 0.06 of its potential returns per unit of risk. Lima Dua Lima is currently generating about -0.02 per unit of risk. If you would invest 584,382 in PT Indofood Sukses on November 27, 2024 and sell it today you would earn a total of 198,118 from holding PT Indofood Sukses or generate 33.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.78% |
| Values | Daily Returns |
PT Indofood Sukses vs. Lima Dua Lima
Performance |
| Timeline |
| PT Indofood Sukses |
| Lima Dua Lima |
PT Indofood and Lima Dua Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PT Indofood and Lima Dua
The main advantage of trading using opposite PT Indofood and Lima Dua positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PT Indofood position performs unexpectedly, Lima Dua 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 Lima Dua will offset losses from the drop in Lima Dua'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 |
| Lima Dua vs. Imago Mulia Persada | Lima Dua vs. PT Sunter Lakeside | Lima Dua vs. Damai Sejahtera Abadi | Lima Dua vs. Panca Anugrah Wisesa |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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