Correlation Between PT Indofood and Tsingtao Brewery
Can any of the company-specific risk be diversified away by investing in both PT Indofood and Tsingtao Brewery 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 Tsingtao Brewery 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 Tsingtao Brewery, you can compare the effects of market volatilities on PT Indofood and Tsingtao Brewery 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 Tsingtao Brewery. Check out your portfolio center. Please also check ongoing floating volatility patterns of PT Indofood and Tsingtao Brewery.
Diversification Opportunities for PT Indofood and Tsingtao Brewery
-0.06 | Correlation Coefficient |
Good diversification
The 3 months correlation between ISM and Tsingtao is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding PT Indofood Sukses and Tsingtao Brewery in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tsingtao Brewery 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 Tsingtao Brewery. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tsingtao Brewery has no effect on the direction of PT Indofood i.e., PT Indofood and Tsingtao Brewery go up and down completely randomly.
Pair Corralation between PT Indofood and Tsingtao Brewery
Assuming the 90 days horizon PT Indofood is expected to generate 1.94 times less return on investment than Tsingtao Brewery. In addition to that, PT Indofood is 1.26 times more volatile than Tsingtao Brewery. It trades about 0.09 of its total potential returns per unit of risk. Tsingtao Brewery is currently generating about 0.22 per unit of volatility. If you would invest 594.00 in Tsingtao Brewery on September 20, 2024 and sell it today you would earn a total of 62.00 from holding Tsingtao Brewery or generate 10.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
PT Indofood Sukses vs. Tsingtao Brewery
Performance |
| Timeline |
| PT Indofood Sukses |
| Tsingtao Brewery |
PT Indofood and Tsingtao Brewery Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PT Indofood and Tsingtao Brewery
The main advantage of trading using opposite PT Indofood and Tsingtao Brewery positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PT Indofood position performs unexpectedly, Tsingtao Brewery 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 Tsingtao Brewery will offset losses from the drop in Tsingtao Brewery's long position.| PT Indofood vs. Superior Plus Corp | PT Indofood vs. SIVERS SEMICONDUCTORS AB | PT Indofood vs. NorAm Drilling AS | PT Indofood vs. Norsk Hydro ASA |
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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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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