Correlation Between PT Indofood and Coca-Cola FEMSA
Can any of the company-specific risk be diversified away by investing in both PT Indofood and Coca-Cola FEMSA 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 Coca-Cola FEMSA 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 Coca Cola FEMSA SAB, you can compare the effects of market volatilities on PT Indofood and Coca-Cola FEMSA 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 Coca-Cola FEMSA. Check out your portfolio center. Please also check ongoing floating volatility patterns of PT Indofood and Coca-Cola FEMSA.
Diversification Opportunities for PT Indofood and Coca-Cola FEMSA
-0.61 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between ISM and Coca-Cola is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding PT Indofood Sukses and Coca Cola FEMSA SAB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Coca Cola FEMSA 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 Coca-Cola FEMSA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Coca Cola FEMSA has no effect on the direction of PT Indofood i.e., PT Indofood and Coca-Cola FEMSA go up and down completely randomly.
Pair Corralation between PT Indofood and Coca-Cola FEMSA
Assuming the 90 days horizon PT Indofood is expected to generate 6.49 times less return on investment than Coca-Cola FEMSA. But when comparing it to its historical volatility, PT Indofood Sukses is 3.59 times less risky than Coca-Cola FEMSA. It trades about 0.03 of its potential returns per unit of risk. Coca Cola FEMSA SAB is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 431.00 in Coca Cola FEMSA SAB on September 12, 2024 and sell it today you would earn a total of 329.00 from holding Coca Cola FEMSA SAB or generate 76.33% 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. Coca Cola FEMSA SAB
Performance |
| Timeline |
| PT Indofood Sukses |
| Coca Cola FEMSA |
PT Indofood and Coca-Cola FEMSA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PT Indofood and Coca-Cola FEMSA
The main advantage of trading using opposite PT Indofood and Coca-Cola FEMSA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PT Indofood position performs unexpectedly, Coca-Cola FEMSA 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 Coca-Cola FEMSA will offset losses from the drop in Coca-Cola FEMSA'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 |
| Coca-Cola FEMSA vs. AAC TECHNOLOGHLDGADR | Coca-Cola FEMSA vs. Citic Telecom International | Coca-Cola FEMSA vs. Consolidated Communications Holdings | Coca-Cola FEMSA vs. CITIC Telecom International |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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