Correlation Between PT Indofood and Global Sukses
Can any of the company-specific risk be diversified away by investing in both PT Indofood and Global Sukses 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 Global Sukses 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 Global Sukses Solusi, you can compare the effects of market volatilities on PT Indofood and Global Sukses 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 Global Sukses. Check out your portfolio center. Please also check ongoing floating volatility patterns of PT Indofood and Global Sukses.
Diversification Opportunities for PT Indofood and Global Sukses
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between INDF and Global is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding PT Indofood Sukses and Global Sukses Solusi in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Sukses Solusi 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 Global Sukses. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Sukses Solusi has no effect on the direction of PT Indofood i.e., PT Indofood and Global Sukses go up and down completely randomly.
Pair Corralation between PT Indofood and Global Sukses
Assuming the 90 days trading horizon PT Indofood Sukses is expected to generate 0.5 times more return on investment than Global Sukses. However, PT Indofood Sukses is 2.0 times less risky than Global Sukses. It trades about 0.1 of its potential returns per unit of risk. Global Sukses Solusi is currently generating about -0.12 per unit of risk. If you would invest 730,000 in PT Indofood Sukses on September 2, 2024 and sell it today you would earn a total of 25,000 from holding PT Indofood Sukses or generate 3.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
PT Indofood Sukses vs. Global Sukses Solusi
Performance |
| Timeline |
| PT Indofood Sukses |
| Global Sukses Solusi |
PT Indofood and Global Sukses Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PT Indofood and Global Sukses
The main advantage of trading using opposite PT Indofood and Global Sukses positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PT Indofood position performs unexpectedly, Global Sukses 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 Global Sukses will offset losses from the drop in Global Sukses' 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 |
| Global Sukses vs. Trimegah Karya Pratama | Global Sukses vs. Surya Biru Murni | Global Sukses vs. Indo Oil Perkasa | Global Sukses vs. Wira Global Solusi |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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