Correlation Between PEPKOR and PT Indofood
Can any of the company-specific risk be diversified away by investing in both PEPKOR 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 PEPKOR and PT Indofood into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PEPKOR LTD and PT Indofood Sukses, you can compare the effects of market volatilities on PEPKOR 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 PEPKOR with a short position of PT Indofood. Check out your portfolio center. Please also check ongoing floating volatility patterns of PEPKOR and PT Indofood.
Diversification Opportunities for PEPKOR and PT Indofood
0.33 | Correlation Coefficient |
Weak diversification
The 3 months correlation between PEPKOR and ISM is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding PEPKOR LTD 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 PEPKOR 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 PEPKOR LTD 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 PEPKOR i.e., PEPKOR and PT Indofood go up and down completely randomly.
Pair Corralation between PEPKOR and PT Indofood
Assuming the 90 days trading horizon PEPKOR LTD is expected to generate 1.68 times more return on investment than PT Indofood. However, PEPKOR is 1.68 times more volatile than PT Indofood Sukses. It trades about 0.07 of its potential returns per unit of risk. PT Indofood Sukses is currently generating about 0.02 per unit of risk. If you would invest 26.00 in PEPKOR LTD on September 5, 2024 and sell it today you would earn a total of 118.00 from holding PEPKOR LTD or generate 453.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
PEPKOR LTD vs. PT Indofood Sukses
Performance |
| Timeline |
| PEPKOR LTD |
| PT Indofood Sukses |
PEPKOR and PT Indofood Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PEPKOR and PT Indofood
The main advantage of trading using opposite PEPKOR and PT Indofood positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PEPKOR 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.| PEPKOR vs. PT Indofood Sukses | PEPKOR vs. NTG Nordic Transport | PEPKOR vs. Dairy Farm International | PEPKOR vs. BII Railway Transportation |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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