Correlation Between PT Indofood and SHELF DRILLING
Can any of the company-specific risk be diversified away by investing in both PT Indofood and SHELF DRILLING 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 SHELF DRILLING 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 SHELF DRILLING LTD, you can compare the effects of market volatilities on PT Indofood and SHELF DRILLING 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 SHELF DRILLING. Check out your portfolio center. Please also check ongoing floating volatility patterns of PT Indofood and SHELF DRILLING.
Diversification Opportunities for PT Indofood and SHELF DRILLING
-0.64 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between ISM and SHELF is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding PT Indofood Sukses and SHELF DRILLING LTD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SHELF DRILLING LTD 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 SHELF DRILLING. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SHELF DRILLING LTD has no effect on the direction of PT Indofood i.e., PT Indofood and SHELF DRILLING go up and down completely randomly.
Pair Corralation between PT Indofood and SHELF DRILLING
Assuming the 90 days horizon PT Indofood Sukses is expected to generate 0.91 times more return on investment than SHELF DRILLING. However, PT Indofood Sukses is 1.1 times less risky than SHELF DRILLING. It trades about 0.03 of its potential returns per unit of risk. SHELF DRILLING LTD is currently generating about -0.06 per unit of risk. If you would invest 40.00 in PT Indofood Sukses on September 3, 2024 and sell it today you would earn a total of 3.00 from holding PT Indofood Sukses or generate 7.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
PT Indofood Sukses vs. SHELF DRILLING LTD
Performance |
| Timeline |
| PT Indofood Sukses |
| SHELF DRILLING LTD |
PT Indofood and SHELF DRILLING Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PT Indofood and SHELF DRILLING
The main advantage of trading using opposite PT Indofood and SHELF DRILLING positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PT Indofood position performs unexpectedly, SHELF DRILLING 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 SHELF DRILLING will offset losses from the drop in SHELF DRILLING's long position.| PT Indofood vs. Nestl SA | PT Indofood vs. Kraft Heinz Co | PT Indofood vs. General Mills | PT Indofood vs. Kellogg Company |
| SHELF DRILLING vs. Eastman Chemical | SHELF DRILLING vs. Silicon Motion Technology | SHELF DRILLING vs. North American Construction | SHELF DRILLING vs. DAIRY FARM INTL |
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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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