Correlation Between Indofood Sukses and Kellanova
Can any of the company-specific risk be diversified away by investing in both Indofood Sukses and Kellanova 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 Indofood Sukses and Kellanova into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Indofood Sukses Makmur and Kellanova, you can compare the effects of market volatilities on Indofood Sukses and Kellanova 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 Indofood Sukses with a short position of Kellanova. Check out your portfolio center. Please also check ongoing floating volatility patterns of Indofood Sukses and Kellanova.
Diversification Opportunities for Indofood Sukses and Kellanova
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Indofood and Kellanova is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Indofood Sukses Makmur and Kellanova in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kellanova and Indofood Sukses 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 Indofood Sukses Makmur are associated (or correlated) with Kellanova. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kellanova has no effect on the direction of Indofood Sukses i.e., Indofood Sukses and Kellanova go up and down completely randomly.
Pair Corralation between Indofood Sukses and Kellanova
Assuming the 90 days horizon Indofood Sukses Makmur is expected to generate 17.38 times more return on investment than Kellanova. However, Indofood Sukses is 17.38 times more volatile than Kellanova. It trades about 0.08 of its potential returns per unit of risk. Kellanova is currently generating about 0.12 per unit of risk. If you would invest 2,182 in Indofood Sukses Makmur on September 3, 2024 and sell it today you would earn a total of 307.00 from holding Indofood Sukses Makmur or generate 14.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Indofood Sukses Makmur vs. Kellanova
Performance |
| Timeline |
| Indofood Sukses Makmur |
| Kellanova |
Indofood Sukses and Kellanova Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Indofood Sukses and Kellanova
The main advantage of trading using opposite Indofood Sukses and Kellanova positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Indofood Sukses position performs unexpectedly, Kellanova 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 Kellanova will offset losses from the drop in Kellanova's long position.| Indofood Sukses vs. Kellanova | Indofood Sukses vs. Lancaster Colony | Indofood Sukses vs. The A2 Milk | Indofood Sukses vs. Altavoz Entertainment |
| Kellanova vs. Campbell Soup | Kellanova vs. ConAgra Foods | Kellanova vs. Hormel Foods | Kellanova vs. Kraft Heinz Co |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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