Correlation Between Citatah Tbk and PT Indofood

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

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

Diversification Opportunities for Citatah Tbk and PT Indofood

0.14

Correlation Coefficient

Citatah Tbk  PT Indofood

Average diversification

The 3 months correlation between Citatah and INDF is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Citatah Tbk 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 Citatah Tbk 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 Citatah Tbk 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 Citatah Tbk i.e., Citatah Tbk and PT Indofood go up and down completely randomly.

Pair Corralation between Citatah Tbk and PT Indofood

Assuming the 90 days trading horizon Citatah Tbk is expected to generate 1.03 times more return on investment than PT Indofood. However, Citatah Tbk is 1.03 times more volatile than PT Indofood Sukses. It trades about 0.04 of its potential returns per unit of risk. PT Indofood Sukses is currently generating about -0.05 per unit of risk. If you would invest  2,600  in Citatah Tbk on December 30, 2024 and sell it today you would earn a total of  100.00  from holding Citatah Tbk or generate 3.85% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Citatah Tbk  vs.  PT Indofood Sukses

Citatah Tbk

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Citatah Tbk are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent forward-looking signals, Citatah Tbk is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

PT Indofood Sukses

Risk-Adjusted Performance

Very Weak

Over the last 90 days PT Indofood Sukses has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's forward-looking signals remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Pair Trading with Citatah Tbk and PT Indofood

The main advantage of trading using opposite Citatah Tbk and PT Indofood positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Citatah Tbk 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 Citatah Tbk 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.