Correlation Between PT Indofood and BANK RAKYAT
Can any of the company-specific risk be diversified away by investing in both PT Indofood and BANK RAKYAT 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 BANK RAKYAT 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 BANK RAKYAT IND, you can compare the effects of market volatilities on PT Indofood and BANK RAKYAT 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 BANK RAKYAT. Check out your portfolio center. Please also check ongoing floating volatility patterns of PT Indofood and BANK RAKYAT.
Diversification Opportunities for PT Indofood and BANK RAKYAT
-0.77 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between ISM and BANK is -0.77. Overlapping area represents the amount of risk that can be diversified away by holding PT Indofood Sukses and BANK RAKYAT IND in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BANK RAKYAT IND 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 BANK RAKYAT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BANK RAKYAT IND has no effect on the direction of PT Indofood i.e., PT Indofood and BANK RAKYAT go up and down completely randomly.
Pair Corralation between PT Indofood and BANK RAKYAT
Assuming the 90 days horizon PT Indofood Sukses is expected to generate 1.24 times more return on investment than BANK RAKYAT. However, PT Indofood is 1.24 times more volatile than BANK RAKYAT IND. It trades about -0.02 of its potential returns per unit of risk. BANK RAKYAT IND is currently generating about -0.14 per unit of risk. If you would invest 45.00 in PT Indofood Sukses on September 2, 2024 and sell it today you would lose (1.00) from holding PT Indofood Sukses or give up 2.22% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
PT Indofood Sukses vs. BANK RAKYAT IND
Performance |
| Timeline |
| PT Indofood Sukses |
| BANK RAKYAT IND |
PT Indofood and BANK RAKYAT Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PT Indofood and BANK RAKYAT
The main advantage of trading using opposite PT Indofood and BANK RAKYAT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PT Indofood position performs unexpectedly, BANK RAKYAT 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 BANK RAKYAT will offset losses from the drop in BANK RAKYAT's long position.| PT Indofood vs. Danone SA | PT Indofood vs. Superior Plus Corp | PT Indofood vs. NMI Holdings | PT Indofood vs. Origin Agritech |
| BANK RAKYAT vs. SIVERS SEMICONDUCTORS AB | BANK RAKYAT vs. Darden Restaurants | BANK RAKYAT vs. Reliance Steel Aluminum | BANK RAKYAT vs. Q2M Managementberatung AG |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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