Correlation Between Vitasoy International and Indofood Sukses

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Can any of the company-specific risk be diversified away by investing in both Vitasoy International and Indofood Sukses 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 Vitasoy International and Indofood Sukses into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vitasoy International Holdings and Indofood Sukses Makmur, you can compare the effects of market volatilities on Vitasoy International and Indofood Sukses 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 Vitasoy International with a short position of Indofood Sukses. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vitasoy International and Indofood Sukses.

Diversification Opportunities for Vitasoy International and Indofood Sukses

0.12
  Correlation Coefficient

Average diversification

The 3 months correlation between Vitasoy and Indofood is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Vitasoy International Holdings and Indofood Sukses Makmur in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Indofood Sukses Makmur and Vitasoy International 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 Vitasoy International Holdings are associated (or correlated) with Indofood Sukses. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Indofood Sukses Makmur has no effect on the direction of Vitasoy International i.e., Vitasoy International and Indofood Sukses go up and down completely randomly.

Pair Corralation between Vitasoy International and Indofood Sukses

If you would invest  2,490  in Indofood Sukses Makmur on September 12, 2024 and sell it today you would earn a total of  79.00  from holding Indofood Sukses Makmur or generate 3.17% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy4.76%
ValuesDaily Returns

Vitasoy International Holdings  vs.  Indofood Sukses Makmur

 Performance 
       Timeline  
Vitasoy International 

Risk-Adjusted Performance

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Very Weak
Over the last 90 days Vitasoy International Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Vitasoy International is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.
Indofood Sukses Makmur 

Risk-Adjusted Performance

5 of 100

 
Weak
 
Strong
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in Indofood Sukses Makmur are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain primary indicators, Indofood Sukses showed solid returns over the last few months and may actually be approaching a breakup point.

Vitasoy International and Indofood Sukses Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Vitasoy International and Indofood Sukses

The main advantage of trading using opposite Vitasoy International and Indofood Sukses positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vitasoy International position performs unexpectedly, Indofood Sukses 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 Indofood Sukses will offset losses from the drop in Indofood Sukses' long position.
The idea behind Vitasoy International Holdings and Indofood Sukses Makmur 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.
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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 Positions Ratings module to 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.

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