Correlation Between KAUFMAN ET and PT Indofood

Can any of the company-specific risk be diversified away by investing in both KAUFMAN ET 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 KAUFMAN ET and PT Indofood into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between KAUFMAN ET BROAD and PT Indofood Sukses, you can compare the effects of market volatilities on KAUFMAN ET 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 KAUFMAN ET with a short position of PT Indofood. Check out your portfolio center. Please also check ongoing floating volatility patterns of KAUFMAN ET and PT Indofood.

Diversification Opportunities for KAUFMAN ET and PT Indofood

-0.45

Correlation Coefficient

KAUFMAN ET  PT Indofood

Very good diversification

The 3 months correlation between KAUFMAN and ISM is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding KAUFMAN ET BROAD 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 KAUFMAN ET 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 KAUFMAN ET BROAD 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 KAUFMAN ET i.e., KAUFMAN ET and PT Indofood go up and down completely randomly.

Pair Corralation between KAUFMAN ET and PT Indofood

Assuming the 90 days trading horizon KAUFMAN ET BROAD is expected to under-perform the PT Indofood. But the stock apears to be less risky and, when comparing its historical volatility, KAUFMAN ET BROAD is 1.63 times less risky than PT Indofood. The stock trades about -0.06 of its potential returns per unit of risk. The PT Indofood Sukses is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  44.00  in PT Indofood Sukses on October 6, 2024 and sell it today you would lose (1.00) from holding PT Indofood Sukses or give up 2.27% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

KAUFMAN ET BROAD  vs.  PT Indofood Sukses

KAUFMAN ET BROAD

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days KAUFMAN ET BROAD has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical indicators, KAUFMAN ET is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

PT Indofood Sukses

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in PT Indofood Sukses are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, PT Indofood reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with KAUFMAN ET and PT Indofood

The main advantage of trading using opposite KAUFMAN ET and PT Indofood positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KAUFMAN ET 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 KAUFMAN ET BROAD 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.

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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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.