Correlation Between Unilever Indonesia and Fast Food
Can any of the company-specific risk be diversified away by investing in both Unilever Indonesia and Fast Food 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 Unilever Indonesia and Fast Food into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Unilever Indonesia Tbk and Fast Food Indonesia, you can compare the effects of market volatilities on Unilever Indonesia and Fast Food 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 Unilever Indonesia with a short position of Fast Food. Check out your portfolio center. Please also check ongoing floating volatility patterns of Unilever Indonesia and Fast Food.
Diversification Opportunities for Unilever Indonesia and Fast Food
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Unilever and Fast is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Unilever Indonesia Tbk and Fast Food Indonesia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fast Food Indonesia and Unilever Indonesia 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 Unilever Indonesia Tbk are associated (or correlated) with Fast Food. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fast Food Indonesia has no effect on the direction of Unilever Indonesia i.e., Unilever Indonesia and Fast Food go up and down completely randomly.
Pair Corralation between Unilever Indonesia and Fast Food
Assuming the 90 days trading horizon Unilever Indonesia Tbk is expected to under-perform the Fast Food. But the stock apears to be less risky and, when comparing its historical volatility, Unilever Indonesia Tbk is 1.16 times less risky than Fast Food. The stock trades about -0.44 of its potential returns per unit of risk. The Fast Food Indonesia is currently generating about -0.14 of returns per unit of risk over similar time horizon. If you would invest 27,800 in Fast Food Indonesia on November 27, 2024 and sell it today you would lose (2,800) from holding Fast Food Indonesia or give up 10.07% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Unilever Indonesia Tbk vs. Fast Food Indonesia
Performance |
| Timeline |
| Unilever Indonesia Tbk |
| Fast Food Indonesia |
Unilever Indonesia and Fast Food Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Unilever Indonesia and Fast Food
The main advantage of trading using opposite Unilever Indonesia and Fast Food positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Unilever Indonesia position performs unexpectedly, Fast Food 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 Fast Food will offset losses from the drop in Fast Food's long position.| Unilever Indonesia vs. PT Indofood Sukses | Unilever Indonesia vs. Astra International Tbk | Unilever Indonesia vs. Telkom Indonesia Tbk | Unilever Indonesia vs. Bank Central Asia |
| Fast Food vs. Hero Supermarket Tbk | Fast Food vs. Indoritel Makmur Internasional | Fast Food vs. Enseval Putra Megatrading | Fast Food vs. Fks Multi Agro |
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 .
Other Complementary Tools
| Commodity Channel Use Commodity Channel Index to analyze current equity momentum | |
| Risk-Return Analysis View associations between returns expected from investment and the risk you assume | |
| Positions Ratings Determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios | |
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account |