Correlation Between TOREX SEMICONDUCTOR and PT Indofood

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

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

Diversification Opportunities for TOREX SEMICONDUCTOR and PT Indofood

-0.48

Correlation Coefficient

TOREX SEMICONDUCTOR  PT Indofood

Very good diversification

The 3 months correlation between TOREX and ISM is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding TOREX SEMICONDUCTOR LTD 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 TOREX SEMICONDUCTOR 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 TOREX SEMICONDUCTOR LTD 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 TOREX SEMICONDUCTOR i.e., TOREX SEMICONDUCTOR and PT Indofood go up and down completely randomly.

Pair Corralation between TOREX SEMICONDUCTOR and PT Indofood

Assuming the 90 days horizon TOREX SEMICONDUCTOR LTD is expected to generate 1.18 times more return on investment than PT Indofood. However, TOREX SEMICONDUCTOR is 1.18 times more volatile than PT Indofood Sukses. It trades about -0.06 of its potential returns per unit of risk. PT Indofood Sukses is currently generating about -0.19 per unit of risk. If you would invest  760.00  in TOREX SEMICONDUCTOR LTD on October 8, 2024 and sell it today you would lose (20.00) from holding TOREX SEMICONDUCTOR LTD or give up 2.63% of portfolio value over 90 days.

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

TOREX SEMICONDUCTOR LTD  vs.  PT Indofood Sukses

TOREX SEMICONDUCTOR LTD

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days TOREX SEMICONDUCTOR LTD has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

PT Indofood Sukses

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in PT Indofood Sukses are ranked lower than 6 (%) 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 TOREX SEMICONDUCTOR and PT Indofood

The main advantage of trading using opposite TOREX SEMICONDUCTOR and PT Indofood positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TOREX SEMICONDUCTOR 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 TOREX SEMICONDUCTOR LTD 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.