Correlation Between Supreme Cable and PT Indofood
Can any of the company-specific risk be diversified away by investing in both Supreme Cable 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 Supreme Cable and PT Indofood into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Supreme Cable Manufacturing and PT Indofood Sukses, you can compare the effects of market volatilities on Supreme Cable 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 Supreme Cable with a short position of PT Indofood. Check out your portfolio center. Please also check ongoing floating volatility patterns of Supreme Cable and PT Indofood.
Diversification Opportunities for Supreme Cable and PT Indofood
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Supreme and INDF is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Supreme Cable Manufacturing 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 Supreme Cable 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 Supreme Cable Manufacturing 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 Supreme Cable i.e., Supreme Cable and PT Indofood go up and down completely randomly.
Pair Corralation between Supreme Cable and PT Indofood
Assuming the 90 days trading horizon Supreme Cable Manufacturing is expected to generate 38.08 times more return on investment than PT Indofood. However, Supreme Cable is 38.08 times more volatile than PT Indofood Sukses. It trades about 0.04 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 889,885 in Supreme Cable Manufacturing on August 27, 2024 and sell it today you would lose (670,885) from holding Supreme Cable Manufacturing or give up 75.39% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.72% |
| Values | Daily Returns |
Supreme Cable Manufacturing vs. PT Indofood Sukses
Performance |
| Timeline |
| Supreme Cable Manufa |
| PT Indofood Sukses |
Supreme Cable and PT Indofood Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Supreme Cable and PT Indofood
The main advantage of trading using opposite Supreme Cable and PT Indofood positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Supreme Cable 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.| Supreme Cable vs. Voksel Electric Tbk | Supreme Cable vs. Kmi Wire And | Supreme Cable vs. Kabelindo Murni Tbk | Supreme Cable vs. Selamat Sempurna 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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