Correlation Between Universal Music and PT Indofood
Can any of the company-specific risk be diversified away by investing in both Universal Music 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 Universal Music and PT Indofood into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Universal Music Group and PT Indofood Sukses, you can compare the effects of market volatilities on Universal Music 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 Universal Music with a short position of PT Indofood. Check out your portfolio center. Please also check ongoing floating volatility patterns of Universal Music and PT Indofood.
Diversification Opportunities for Universal Music and PT Indofood
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Universal and PIFMF is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Universal Music Group 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 Universal Music 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 Universal Music Group 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 Universal Music i.e., Universal Music and PT Indofood go up and down completely randomly.
Pair Corralation between Universal Music and PT Indofood
If you would invest 39.00 in PT Indofood Sukses on September 1, 2024 and sell it today you would earn a total of 0.00 from holding PT Indofood Sukses or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 4.76% |
| Values | Daily Returns |
Universal Music Group vs. PT Indofood Sukses
Performance |
| Timeline |
| Universal Music Group |
| PT Indofood Sukses |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Universal Music and PT Indofood Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Universal Music and PT Indofood
The main advantage of trading using opposite Universal Music and PT Indofood positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Universal Music 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.| Universal Music vs. Thunderbird Entertainment Group | Universal Music vs. Warner Music Group | Universal Music vs. Live Nation Entertainment | Universal Music vs. Atlanta Braves Holdings, |
| PT Indofood vs. Cadence Design Systems | PT Indofood vs. Braskem SA Class | PT Indofood vs. Stepan Company | PT Indofood vs. Sphere Entertainment Co |
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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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