Correlation Between PT Indofood and United Tractors
Can any of the company-specific risk be diversified away by investing in both PT Indofood and United Tractors 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 United Tractors 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 United Tractors Tbk, you can compare the effects of market volatilities on PT Indofood and United Tractors 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 United Tractors. Check out your portfolio center. Please also check ongoing floating volatility patterns of PT Indofood and United Tractors.
Diversification Opportunities for PT Indofood and United Tractors
0.23 | Correlation Coefficient |
Modest diversification
The 3 months correlation between INDF and United is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding PT Indofood Sukses and United Tractors Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Tractors 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 United Tractors. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United Tractors Tbk has no effect on the direction of PT Indofood i.e., PT Indofood and United Tractors go up and down completely randomly.
Pair Corralation between PT Indofood and United Tractors
Assuming the 90 days trading horizon PT Indofood Sukses is expected to under-perform the United Tractors. In addition to that, PT Indofood is 1.09 times more volatile than United Tractors Tbk. It trades about 0.0 of its total potential returns per unit of risk. United Tractors Tbk is currently generating about 0.03 per unit of volatility. If you would invest 2,680,000 in United Tractors Tbk on August 27, 2024 and sell it today you would earn a total of 20,000 from holding United Tractors Tbk or generate 0.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
PT Indofood Sukses vs. United Tractors Tbk
Performance |
| Timeline |
| PT Indofood Sukses |
| United Tractors Tbk |
PT Indofood and United Tractors Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PT Indofood and United Tractors
The main advantage of trading using opposite PT Indofood and United Tractors positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PT Indofood position performs unexpectedly, United Tractors 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 United Tractors will offset losses from the drop in United Tractors' 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 |
| United Tractors vs. Astra International Tbk | United Tractors vs. Bukit Asam Tbk | United Tractors vs. Semen Indonesia Persero | United Tractors vs. PT Indofood Sukses |
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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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