Correlation Between PT Indofood and USU Software
Can any of the company-specific risk be diversified away by investing in both PT Indofood and USU Software 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 USU Software 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 USU Software AG, you can compare the effects of market volatilities on PT Indofood and USU Software 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 USU Software. Check out your portfolio center. Please also check ongoing floating volatility patterns of PT Indofood and USU Software.
Diversification Opportunities for PT Indofood and USU Software
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between ISM and USU is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding PT Indofood Sukses and USU Software AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on USU Software AG 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 USU Software. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of USU Software AG has no effect on the direction of PT Indofood i.e., PT Indofood and USU Software go up and down completely randomly.
Pair Corralation between PT Indofood and USU Software
Assuming the 90 days horizon PT Indofood Sukses is expected to generate 1.98 times more return on investment than USU Software. However, PT Indofood is 1.98 times more volatile than USU Software AG. It trades about 0.17 of its potential returns per unit of risk. USU Software AG is currently generating about 0.15 per unit of risk. If you would invest 39.00 in PT Indofood Sukses on September 13, 2024 and sell it today you would earn a total of 8.00 from holding PT Indofood Sukses or generate 20.51% 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. USU Software AG
Performance |
| Timeline |
| PT Indofood Sukses |
| USU Software AG |
PT Indofood and USU Software Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PT Indofood and USU Software
The main advantage of trading using opposite PT Indofood and USU Software positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PT Indofood position performs unexpectedly, USU Software 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 USU Software will offset losses from the drop in USU Software's long position.| PT Indofood vs. Hormel Foods | PT Indofood vs. Superior Plus Corp | PT Indofood vs. SIVERS SEMICONDUCTORS AB | PT Indofood vs. NorAm Drilling AS |
| USU Software vs. Cognizant Technology Solutions | USU Software vs. Superior Plus Corp | USU Software vs. SIVERS SEMICONDUCTORS AB | USU Software vs. Norsk Hydro ASA |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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