Correlation Between PT Indofood and PT Cerestar
Can any of the company-specific risk be diversified away by investing in both PT Indofood and PT Cerestar 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 PT Cerestar 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 PT Cerestar Indonesia, you can compare the effects of market volatilities on PT Indofood and PT Cerestar 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 PT Cerestar. Check out your portfolio center. Please also check ongoing floating volatility patterns of PT Indofood and PT Cerestar.
Diversification Opportunities for PT Indofood and PT Cerestar
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between INDF and TRGU is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding PT Indofood Sukses and PT Cerestar Indonesia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PT Cerestar 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 PT Cerestar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PT Cerestar Indonesia has no effect on the direction of PT Indofood i.e., PT Indofood and PT Cerestar go up and down completely randomly.
Pair Corralation between PT Indofood and PT Cerestar
Assuming the 90 days trading horizon PT Indofood Sukses is expected to generate 1.49 times more return on investment than PT Cerestar. However, PT Indofood is 1.49 times more volatile than PT Cerestar Indonesia. It trades about 0.12 of its potential returns per unit of risk. PT Cerestar Indonesia is currently generating about 0.1 per unit of risk. If you would invest 705,000 in PT Indofood Sukses on August 30, 2024 and sell it today you would earn a total of 60,000 from holding PT Indofood Sukses or generate 8.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
PT Indofood Sukses vs. PT Cerestar Indonesia
Performance |
| Timeline |
| PT Indofood Sukses |
| PT Cerestar Indonesia |
PT Indofood and PT Cerestar Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PT Indofood and PT Cerestar
The main advantage of trading using opposite PT Indofood and PT Cerestar positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PT Indofood position performs unexpectedly, PT Cerestar 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 PT Cerestar will offset losses from the drop in PT Cerestar'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 |
| PT Cerestar vs. Autopedia Sukses Lestari | PT Cerestar vs. PT Dewi Shri | PT Cerestar vs. PT Cilacap Samudera | PT Cerestar vs. PT Sari Kreasi |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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