Correlation Between PT Indofood and CenterPoint Energy
Can any of the company-specific risk be diversified away by investing in both PT Indofood and CenterPoint Energy 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 CenterPoint Energy 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 CenterPoint Energy, you can compare the effects of market volatilities on PT Indofood and CenterPoint Energy 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 CenterPoint Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of PT Indofood and CenterPoint Energy.
Diversification Opportunities for PT Indofood and CenterPoint Energy
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between ISM and CenterPoint is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding PT Indofood Sukses and CenterPoint Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CenterPoint Energy 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 CenterPoint Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CenterPoint Energy has no effect on the direction of PT Indofood i.e., PT Indofood and CenterPoint Energy go up and down completely randomly.
Pair Corralation between PT Indofood and CenterPoint Energy
Assuming the 90 days horizon PT Indofood is expected to generate 5.56 times less return on investment than CenterPoint Energy. In addition to that, PT Indofood is 1.49 times more volatile than CenterPoint Energy. It trades about 0.05 of its total potential returns per unit of risk. CenterPoint Energy is currently generating about 0.43 per unit of volatility. If you would invest 2,581 in CenterPoint Energy on September 4, 2024 and sell it today you would earn a total of 479.00 from holding CenterPoint Energy or generate 18.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
PT Indofood Sukses vs. CenterPoint Energy
Performance |
| Timeline |
| PT Indofood Sukses |
| CenterPoint Energy |
PT Indofood and CenterPoint Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PT Indofood and CenterPoint Energy
The main advantage of trading using opposite PT Indofood and CenterPoint Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PT Indofood position performs unexpectedly, CenterPoint Energy 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 CenterPoint Energy will offset losses from the drop in CenterPoint Energy's long position.| PT Indofood vs. Zurich Insurance Group | PT Indofood vs. ASURE SOFTWARE | PT Indofood vs. Unity Software | PT Indofood vs. Alfa Financial Software |
| CenterPoint Energy vs. CN MODERN DAIRY | CenterPoint Energy vs. Mobilezone Holding AG | CenterPoint Energy vs. PT Indofood Sukses | CenterPoint Energy vs. Perseus Mining Limited |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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