Correlation Between PT Indofood and CNH Industrial
Can any of the company-specific risk be diversified away by investing in both PT Indofood and CNH Industrial 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 CNH Industrial 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 CNH Industrial NV, you can compare the effects of market volatilities on PT Indofood and CNH Industrial 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 CNH Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of PT Indofood and CNH Industrial.
Diversification Opportunities for PT Indofood and CNH Industrial
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between ISM and CNH is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding PT Indofood Sukses and CNH Industrial NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CNH Industrial NV 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 CNH Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CNH Industrial NV has no effect on the direction of PT Indofood i.e., PT Indofood and CNH Industrial go up and down completely randomly.
Pair Corralation between PT Indofood and CNH Industrial
Assuming the 90 days horizon PT Indofood is expected to generate 1.82 times less return on investment than CNH Industrial. In addition to that, PT Indofood is 1.12 times more volatile than CNH Industrial NV. It trades about 0.13 of its total potential returns per unit of risk. CNH Industrial NV is currently generating about 0.27 per unit of volatility. If you would invest 995.00 in CNH Industrial NV on September 12, 2024 and sell it today you would earn a total of 141.00 from holding CNH Industrial NV or generate 14.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.65% |
| Values | Daily Returns |
PT Indofood Sukses vs. CNH Industrial NV
Performance |
| Timeline |
| PT Indofood Sukses |
| CNH Industrial NV |
PT Indofood and CNH Industrial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PT Indofood and CNH Industrial
The main advantage of trading using opposite PT Indofood and CNH Industrial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PT Indofood position performs unexpectedly, CNH Industrial 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 CNH Industrial will offset losses from the drop in CNH Industrial's long position.| PT Indofood vs. AUSTEVOLL SEAFOOD | PT Indofood vs. Direct Line Insurance | PT Indofood vs. QBE Insurance Group | PT Indofood vs. ZURICH INSURANCE GROUP |
| CNH Industrial vs. PT Indofood Sukses | CNH Industrial vs. Lery Seafood Group | CNH Industrial vs. Tyson Foods | CNH Industrial vs. INDOFOOD AGRI RES |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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