Correlation Between Performance Food and PT Indo
Can any of the company-specific risk be diversified away by investing in both Performance Food and PT Indo 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 Performance Food and PT Indo into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Performance Food Group and PT Indo Tambangraya, you can compare the effects of market volatilities on Performance Food and PT Indo 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 Performance Food with a short position of PT Indo. Check out your portfolio center. Please also check ongoing floating volatility patterns of Performance Food and PT Indo.
Diversification Opportunities for Performance Food and PT Indo
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Performance and 3IB is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Performance Food Group and PT Indo Tambangraya in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PT Indo Tambangraya and Performance Food 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 Performance Food Group are associated (or correlated) with PT Indo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PT Indo Tambangraya has no effect on the direction of Performance Food i.e., Performance Food and PT Indo go up and down completely randomly.
Pair Corralation between Performance Food and PT Indo
Assuming the 90 days trading horizon Performance Food Group is expected to generate 0.4 times more return on investment than PT Indo. However, Performance Food Group is 2.51 times less risky than PT Indo. It trades about 0.1 of its potential returns per unit of risk. PT Indo Tambangraya is currently generating about 0.03 per unit of risk. If you would invest 5,700 in Performance Food Group on September 14, 2024 and sell it today you would earn a total of 2,750 from holding Performance Food Group or generate 48.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Performance Food Group vs. PT Indo Tambangraya
Performance |
| Timeline |
| Performance Food |
| PT Indo Tambangraya |
Performance Food and PT Indo Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Performance Food and PT Indo
The main advantage of trading using opposite Performance Food and PT Indo positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Performance Food position performs unexpectedly, PT Indo 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 PT Indo will offset losses from the drop in PT Indo's long position.| Performance Food vs. Apple Inc | Performance Food vs. Apple Inc | Performance Food vs. Apple Inc | Performance Food vs. Apple Inc |
| PT Indo vs. Quaker Chemical | PT Indo vs. Performance Food Group | PT Indo vs. AIR PRODCHEMICALS | PT Indo vs. NISSAN CHEMICAL IND |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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