Correlation Between Perusahaan Gas and PT Indofood
Can any of the company-specific risk be diversified away by investing in both Perusahaan Gas and PT Indofood 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 Perusahaan Gas and PT Indofood into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Perusahaan Gas Negara and PT Indofood Sukses, you can compare the effects of market volatilities on Perusahaan Gas and PT Indofood 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 Perusahaan Gas with a short position of PT Indofood. Check out your portfolio center. Please also check ongoing floating volatility patterns of Perusahaan Gas and PT Indofood.
Diversification Opportunities for Perusahaan Gas and PT Indofood
-0.22 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Perusahaan and INDF is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Perusahaan Gas Negara and PT Indofood Sukses in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PT Indofood Sukses and Perusahaan Gas 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 Perusahaan Gas Negara are associated (or correlated) with PT Indofood. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PT Indofood Sukses has no effect on the direction of Perusahaan Gas i.e., Perusahaan Gas and PT Indofood go up and down completely randomly.
Pair Corralation between Perusahaan Gas and PT Indofood
Assuming the 90 days trading horizon Perusahaan Gas Negara is expected to generate 1.02 times more return on investment than PT Indofood. However, Perusahaan Gas is 1.02 times more volatile than PT Indofood Sukses. It trades about 0.08 of its potential returns per unit of risk. PT Indofood Sukses is currently generating about 0.03 per unit of risk. If you would invest 150,000 in Perusahaan Gas Negara on August 28, 2024 and sell it today you would earn a total of 4,500 from holding Perusahaan Gas Negara or generate 3.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Perusahaan Gas Negara vs. PT Indofood Sukses
Performance |
| Timeline |
| Perusahaan Gas Negara |
| PT Indofood Sukses |
Perusahaan Gas and PT Indofood Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Perusahaan Gas and PT Indofood
The main advantage of trading using opposite Perusahaan Gas and PT Indofood positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Perusahaan Gas position performs unexpectedly, PT Indofood 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 Indofood will offset losses from the drop in PT Indofood's long position.| Perusahaan Gas vs. Aneka Tambang Persero | Perusahaan Gas vs. Bukit Asam Tbk | Perusahaan Gas vs. Telkom Indonesia Tbk | Perusahaan Gas vs. Astra International Tbk |
| PT Indofood vs. Astra International Tbk | PT Indofood vs. Unilever Indonesia Tbk | PT Indofood vs. Telkom Indonesia Tbk | PT Indofood vs. Bank Mandiri Persero |
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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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