Correlation Between PT Indofood and SCANSOURCE
Can any of the company-specific risk be diversified away by investing in both PT Indofood and SCANSOURCE 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 SCANSOURCE 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 SCANSOURCE, you can compare the effects of market volatilities on PT Indofood and SCANSOURCE 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 SCANSOURCE. Check out your portfolio center. Please also check ongoing floating volatility patterns of PT Indofood and SCANSOURCE.
Diversification Opportunities for PT Indofood and SCANSOURCE
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between ISM and SCANSOURCE is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding PT Indofood Sukses and SCANSOURCE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SCANSOURCE 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 SCANSOURCE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SCANSOURCE has no effect on the direction of PT Indofood i.e., PT Indofood and SCANSOURCE go up and down completely randomly.
Pair Corralation between PT Indofood and SCANSOURCE
Assuming the 90 days horizon PT Indofood is expected to generate 1.18 times less return on investment than SCANSOURCE. In addition to that, PT Indofood is 1.9 times more volatile than SCANSOURCE. It trades about 0.03 of its total potential returns per unit of risk. SCANSOURCE is currently generating about 0.06 per unit of volatility. If you would invest 2,780 in SCANSOURCE on September 25, 2024 and sell it today you would earn a total of 1,800 from holding SCANSOURCE or generate 64.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
PT Indofood Sukses vs. SCANSOURCE
Performance |
| Timeline |
| PT Indofood Sukses |
| SCANSOURCE |
PT Indofood and SCANSOURCE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PT Indofood and SCANSOURCE
The main advantage of trading using opposite PT Indofood and SCANSOURCE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PT Indofood position performs unexpectedly, SCANSOURCE 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 SCANSOURCE will offset losses from the drop in SCANSOURCE's long position.| PT Indofood vs. Mowi ASA | PT Indofood vs. LEROY SEAFOOD GRUNSPADR | PT Indofood vs. Lery Seafood Group | PT Indofood vs. Nisshin Seifun Group |
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 Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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