Correlation Between PT Indofood and Singapore Reinsurance
Can any of the company-specific risk be diversified away by investing in both PT Indofood and Singapore Reinsurance 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 Singapore Reinsurance 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 Singapore Reinsurance, you can compare the effects of market volatilities on PT Indofood and Singapore Reinsurance 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 Singapore Reinsurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of PT Indofood and Singapore Reinsurance.
Diversification Opportunities for PT Indofood and Singapore Reinsurance
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between ISM and Singapore is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding PT Indofood Sukses and Singapore Reinsurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Singapore Reinsurance 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 Singapore Reinsurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Singapore Reinsurance has no effect on the direction of PT Indofood i.e., PT Indofood and Singapore Reinsurance go up and down completely randomly.
Pair Corralation between PT Indofood and Singapore Reinsurance
Assuming the 90 days horizon PT Indofood Sukses is expected to generate 1.9 times more return on investment than Singapore Reinsurance. However, PT Indofood is 1.9 times more volatile than Singapore Reinsurance. It trades about 0.13 of its potential returns per unit of risk. Singapore Reinsurance is currently generating about 0.03 per unit of risk. If you would invest 44.00 in PT Indofood Sukses on September 15, 2024 and sell it today you would earn a total of 3.00 from holding PT Indofood Sukses or generate 6.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
PT Indofood Sukses vs. Singapore Reinsurance
Performance |
| Timeline |
| PT Indofood Sukses |
| Singapore Reinsurance |
PT Indofood and Singapore Reinsurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PT Indofood and Singapore Reinsurance
The main advantage of trading using opposite PT Indofood and Singapore Reinsurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PT Indofood position performs unexpectedly, Singapore Reinsurance 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 Singapore Reinsurance will offset losses from the drop in Singapore Reinsurance'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 |
| Singapore Reinsurance vs. Apple Inc | Singapore Reinsurance vs. Apple Inc | Singapore Reinsurance vs. Apple Inc | Singapore Reinsurance vs. Apple 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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