Correlation Between Stepan and PT Indofood
Can any of the company-specific risk be diversified away by investing in both Stepan 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 Stepan and PT Indofood into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Stepan Company and PT Indofood Sukses, you can compare the effects of market volatilities on Stepan 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 Stepan with a short position of PT Indofood. Check out your portfolio center. Please also check ongoing floating volatility patterns of Stepan and PT Indofood.
Diversification Opportunities for Stepan and PT Indofood
-0.07 | Correlation Coefficient |
Good diversification
The 3 months correlation between Stepan and PIFMF is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Stepan Company 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 Stepan 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 Stepan Company 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 Stepan i.e., Stepan and PT Indofood go up and down completely randomly.
Pair Corralation between Stepan and PT Indofood
If you would invest 7,246 in Stepan Company on September 3, 2024 and sell it today you would earn a total of 444.00 from holding Stepan Company or generate 6.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 5.0% |
| Values | Daily Returns |
Stepan Company vs. PT Indofood Sukses
Performance |
| Timeline |
| Stepan Company |
| PT Indofood Sukses |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Stepan and PT Indofood Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Stepan and PT Indofood
The main advantage of trading using opposite Stepan and PT Indofood positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Stepan 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.The idea behind Stepan Company and PT Indofood Sukses pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| PT Indofood vs. Aptiv PLC | PT Indofood vs. Sun Life Financial | PT Indofood vs. Aegon NV ADR | PT Indofood vs. Dana Inc |
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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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