Correlation Between Performance Food and INDOFOOD AGRI

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Can any of the company-specific risk be diversified away by investing in both Performance Food and INDOFOOD AGRI 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 INDOFOOD AGRI 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 INDOFOOD AGRI RES, you can compare the effects of market volatilities on Performance Food and INDOFOOD AGRI 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 INDOFOOD AGRI. Check out your portfolio center. Please also check ongoing floating volatility patterns of Performance Food and INDOFOOD AGRI.

Diversification Opportunities for Performance Food and INDOFOOD AGRI

PerformanceINDOFOODDiversified AwayPerformanceINDOFOODDiversified Away100%
0.17
  Correlation Coefficient

Average diversification

The 3 months correlation between Performance and INDOFOOD is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Performance Food Group and INDOFOOD AGRI RES in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on INDOFOOD AGRI RES 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 INDOFOOD AGRI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of INDOFOOD AGRI RES has no effect on the direction of Performance Food i.e., Performance Food and INDOFOOD AGRI go up and down completely randomly.

Pair Corralation between Performance Food and INDOFOOD AGRI

Assuming the 90 days trading horizon Performance Food Group is expected to under-perform the INDOFOOD AGRI. But the stock apears to be less risky and, when comparing its historical volatility, Performance Food Group is 1.66 times less risky than INDOFOOD AGRI. The stock trades about -0.25 of its potential returns per unit of risk. The INDOFOOD AGRI RES is currently generating about -0.14 of returns per unit of risk over similar time horizon. If you would invest  22.00  in INDOFOOD AGRI RES on November 27, 2024 and sell it today you would lose (2.00) from holding INDOFOOD AGRI RES or give up 9.09% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Performance Food Group  vs.  INDOFOOD AGRI RES

 Performance 
JavaScript chart by amCharts 3.21.15Dec2025Feb -50510
JavaScript chart by amCharts 3.21.15P5F ZVF
       Timeline  
Performance Food 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days Performance Food Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Performance Food is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb7880828486
INDOFOOD AGRI RES 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days INDOFOOD AGRI RES has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb0.20.2050.210.2150.22

Performance Food and INDOFOOD AGRI Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-4.32-3.24-2.15-1.07-0.01811.042.133.224.325.41 0.050.100.150.20
JavaScript chart by amCharts 3.21.15P5F ZVF
       Returns  

Pair Trading with Performance Food and INDOFOOD AGRI

The main advantage of trading using opposite Performance Food and INDOFOOD AGRI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Performance Food position performs unexpectedly, INDOFOOD AGRI 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 INDOFOOD AGRI will offset losses from the drop in INDOFOOD AGRI's long position.
The idea behind Performance Food Group and INDOFOOD AGRI RES pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.

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