Correlation Between Indofood Sukses and USS Co
Can any of the company-specific risk be diversified away by investing in both Indofood Sukses and USS Co 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 USS Co 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 USS Co Ltd, you can compare the effects of market volatilities on Indofood Sukses and USS Co 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 USS Co. Check out your portfolio center. Please also check ongoing floating volatility patterns of Indofood Sukses and USS Co.
Diversification Opportunities for Indofood Sukses and USS Co
-0.33 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Indofood and USS is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Indofood Sukses Makmur and USS Co Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on USS Co 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 USS Co. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of USS Co has no effect on the direction of Indofood Sukses i.e., Indofood Sukses and USS Co go up and down completely randomly.
Pair Corralation between Indofood Sukses and USS Co
Assuming the 90 days horizon Indofood Sukses Makmur is expected to generate 1.83 times more return on investment than USS Co. However, Indofood Sukses is 1.83 times more volatile than USS Co Ltd. It trades about 0.03 of its potential returns per unit of risk. USS Co Ltd is currently generating about 0.04 per unit of risk. If you would invest 2,041 in Indofood Sukses Makmur on September 3, 2024 and sell it today you would earn a total of 448.00 from holding Indofood Sukses Makmur or generate 21.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.8% |
| Values | Daily Returns |
Indofood Sukses Makmur vs. USS Co Ltd
Performance |
| Timeline |
| Indofood Sukses Makmur |
| USS Co |
Indofood Sukses and USS Co Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Indofood Sukses and USS Co
The main advantage of trading using opposite Indofood Sukses and USS Co positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Indofood Sukses position performs unexpectedly, USS Co 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 USS Co will offset losses from the drop in USS Co's long position.| Indofood Sukses vs. Kellanova | Indofood Sukses vs. Lancaster Colony | Indofood Sukses vs. The A2 Milk | Indofood Sukses vs. Altavoz Entertainment |
| USS Co vs. Sonic Automotive | USS Co vs. Lithia Motors | USS Co vs. AutoNation | USS Co vs. Asbury Automotive Group |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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