Correlation Between Sariguna Primatirta and PT Indofood

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

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

Diversification Opportunities for Sariguna Primatirta and PT Indofood

0.12

Correlation Coefficient

Sariguna Primatirta  PT Indofood

Average diversification

The 3 months correlation between Sariguna and INDF is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Sariguna Primatirta PT 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 Sariguna Primatirta 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 Sariguna Primatirta PT 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 Sariguna Primatirta i.e., Sariguna Primatirta and PT Indofood go up and down completely randomly.

Pair Corralation between Sariguna Primatirta and PT Indofood

Assuming the 90 days trading horizon Sariguna Primatirta PT is expected to generate 1.22 times more return on investment than PT Indofood. However, Sariguna Primatirta is 1.22 times more volatile than PT Indofood Sukses. It trades about 0.09 of its potential returns per unit of risk. PT Indofood Sukses is currently generating about 0.1 per unit of risk. If you would invest  134,500  in Sariguna Primatirta PT on September 29, 2024 and sell it today you would earn a total of  15,000  from holding Sariguna Primatirta PT or generate 11.15% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.41%
Values	Daily Returns

Sariguna Primatirta PT  vs.  PT Indofood Sukses

Sariguna Primatirta

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Sariguna Primatirta PT are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Sariguna Primatirta may actually be approaching a critical reversion point that can send shares even higher in January 2025.

PT Indofood Sukses

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in PT Indofood Sukses are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, PT Indofood may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Sariguna Primatirta and PT Indofood

The main advantage of trading using opposite Sariguna Primatirta and PT Indofood positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sariguna Primatirta 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 Sariguna Primatirta PT 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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.