Correlation Between PT Indofood and Multi Bintang
Can any of the company-specific risk be diversified away by investing in both PT Indofood and Multi Bintang 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 Multi Bintang 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 Multi Bintang Indonesia, you can compare the effects of market volatilities on PT Indofood and Multi Bintang 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 Multi Bintang. Check out your portfolio center. Please also check ongoing floating volatility patterns of PT Indofood and Multi Bintang.
Diversification Opportunities for PT Indofood and Multi Bintang
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between INDF and Multi is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding PT Indofood Sukses and Multi Bintang Indonesia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Multi Bintang Indonesia 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 Multi Bintang. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Multi Bintang Indonesia has no effect on the direction of PT Indofood i.e., PT Indofood and Multi Bintang go up and down completely randomly.
Pair Corralation between PT Indofood and Multi Bintang
Assuming the 90 days trading horizon PT Indofood Sukses is expected to generate 1.54 times more return on investment than Multi Bintang. However, PT Indofood is 1.54 times more volatile than Multi Bintang Indonesia. It trades about 0.03 of its potential returns per unit of risk. Multi Bintang Indonesia is currently generating about -0.05 per unit of risk. If you would invest 632,888 in PT Indofood Sukses on August 28, 2024 and sell it today you would earn a total of 122,112 from holding PT Indofood Sukses or generate 19.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.79% |
| Values | Daily Returns |
PT Indofood Sukses vs. Multi Bintang Indonesia
Performance |
| Timeline |
| PT Indofood Sukses |
| Multi Bintang Indonesia |
PT Indofood and Multi Bintang Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PT Indofood and Multi Bintang
The main advantage of trading using opposite PT Indofood and Multi Bintang positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PT Indofood position performs unexpectedly, Multi Bintang 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 Multi Bintang will offset losses from the drop in Multi Bintang'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 |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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