Correlation Between PT Indofood and Bukit Asam
Can any of the company-specific risk be diversified away by investing in both PT Indofood and Bukit Asam 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 Bukit Asam 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 Bukit Asam Tbk, you can compare the effects of market volatilities on PT Indofood and Bukit Asam 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 Bukit Asam. Check out your portfolio center. Please also check ongoing floating volatility patterns of PT Indofood and Bukit Asam.
Diversification Opportunities for PT Indofood and Bukit Asam
0.43 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between INDF and Bukit is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding PT Indofood Sukses and Bukit Asam Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bukit Asam 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 Bukit Asam. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bukit Asam Tbk has no effect on the direction of PT Indofood i.e., PT Indofood and Bukit Asam go up and down completely randomly.
Pair Corralation between PT Indofood and Bukit Asam
Assuming the 90 days trading horizon PT Indofood is expected to generate 1.49 times less return on investment than Bukit Asam. But when comparing it to its historical volatility, PT Indofood Sukses is 1.56 times less risky than Bukit Asam. It trades about 0.04 of its potential returns per unit of risk. Bukit Asam Tbk is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 205,135 in Bukit Asam Tbk on November 2, 2024 and sell it today you would earn a total of 60,865 from holding Bukit Asam Tbk or generate 29.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.79% |
| Values | Daily Returns |
PT Indofood Sukses vs. Bukit Asam Tbk
Performance |
| Timeline |
| PT Indofood Sukses |
| Bukit Asam Tbk |
PT Indofood and Bukit Asam Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PT Indofood and Bukit Asam
The main advantage of trading using opposite PT Indofood and Bukit Asam positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PT Indofood position performs unexpectedly, Bukit Asam 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 Bukit Asam will offset losses from the drop in Bukit Asam'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 |
| Bukit Asam vs. Perusahaan Gas Negara | Bukit Asam vs. Indo Tambangraya Megah | Bukit Asam vs. Aneka Tambang Persero | Bukit Asam vs. Adaro Energy 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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