Correlation Between PT Indofood and PPG Industries
Can any of the company-specific risk be diversified away by investing in both PT Indofood and PPG Industries 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 PPG Industries 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 PPG Industries, you can compare the effects of market volatilities on PT Indofood and PPG Industries 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 PPG Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of PT Indofood and PPG Industries.
Diversification Opportunities for PT Indofood and PPG Industries
0.13 | Correlation Coefficient |
Average diversification
The 3 months correlation between ISM and PPG is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding PT Indofood Sukses and PPG Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PPG Industries 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 PPG Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PPG Industries has no effect on the direction of PT Indofood i.e., PT Indofood and PPG Industries go up and down completely randomly.
Pair Corralation between PT Indofood and PPG Industries
Assuming the 90 days horizon PT Indofood Sukses is expected to generate 3.0 times more return on investment than PPG Industries. However, PT Indofood is 3.0 times more volatile than PPG Industries. It trades about 0.03 of its potential returns per unit of risk. PPG Industries is currently generating about 0.0 per unit of risk. If you would invest 37.00 in PT Indofood Sukses on November 28, 2024 and sell it today you would earn a total of 7.00 from holding PT Indofood Sukses or generate 18.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.8% |
| Values | Daily Returns |
PT Indofood Sukses vs. PPG Industries
Performance |
| Timeline |
| PT Indofood Sukses |
| PPG Industries |
PT Indofood and PPG Industries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PT Indofood and PPG Industries
The main advantage of trading using opposite PT Indofood and PPG Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PT Indofood position performs unexpectedly, PPG Industries 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 PPG Industries will offset losses from the drop in PPG Industries' long position.| PT Indofood vs. BOSTON BEER A | PT Indofood vs. Japan Asia Investment | PT Indofood vs. PennyMac Mortgage Investment | PT Indofood vs. Apollo Investment Corp |
| PPG Industries vs. Stag Industrial | PPG Industries vs. Harmony Gold Mining | PPG Industries vs. East Africa Metals | PPG Industries vs. MCEWEN MINING INC |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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