Correlation Between Indofood Sukses and SGS SA
Can any of the company-specific risk be diversified away by investing in both Indofood Sukses and SGS SA 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 SGS SA 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 SGS SA, you can compare the effects of market volatilities on Indofood Sukses and SGS SA 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 SGS SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Indofood Sukses and SGS SA.
Diversification Opportunities for Indofood Sukses and SGS SA
-0.34 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Indofood and SGS is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Indofood Sukses Makmur and SGS SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SGS SA 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 SGS SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SGS SA has no effect on the direction of Indofood Sukses i.e., Indofood Sukses and SGS SA go up and down completely randomly.
Pair Corralation between Indofood Sukses and SGS SA
Assuming the 90 days horizon Indofood Sukses Makmur is expected to generate 2.16 times more return on investment than SGS SA. However, Indofood Sukses is 2.16 times more volatile than SGS SA. It trades about 0.05 of its potential returns per unit of risk. SGS SA is currently generating about -0.28 per unit of risk. If you would invest 2,350 in Indofood Sukses Makmur on August 27, 2024 and sell it today you would earn a total of 59.00 from holding Indofood Sukses Makmur or generate 2.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Indofood Sukses Makmur vs. SGS SA
Performance |
| Timeline |
| Indofood Sukses Makmur |
| SGS SA |
Indofood Sukses and SGS SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Indofood Sukses and SGS SA
The main advantage of trading using opposite Indofood Sukses and SGS SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Indofood Sukses position performs unexpectedly, SGS SA 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 SGS SA will offset losses from the drop in SGS SA's long position.| Indofood Sukses vs. Toyo Suisan Kaisha | Indofood Sukses vs. Bank Mandiri Persero | Indofood Sukses vs. Astra International Tbk | Indofood Sukses vs. United Tractors Tbk |
| SGS SA vs. Sack Lunch Productions | SGS SA vs. Potash America | SGS SA vs. Dalrada Financial Corp | SGS SA vs. TransUnion |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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