Correlation Between Indofood Cbp and Surya Citra

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

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

Diversification Opportunities for Indofood Cbp and Surya Citra

-0.58

Correlation Coefficient

Indofood Cbp  Surya Citra

Excellent diversification

The 3 months correlation between Indofood and Surya is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Indofood Cbp Sukses and Surya Citra Media in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Surya Citra Media and Indofood Cbp 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 Indofood Cbp Sukses are associated (or correlated) with Surya Citra. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Surya Citra Media has no effect on the direction of Indofood Cbp i.e., Indofood Cbp and Surya Citra go up and down completely randomly.

Pair Corralation between Indofood Cbp and Surya Citra

Assuming the 90 days trading horizon Indofood Cbp is expected to generate 1.37 times less return on investment than Surya Citra. But when comparing it to its historical volatility, Indofood Cbp Sukses is 2.25 times less risky than Surya Citra. It trades about 0.08 of its potential returns per unit of risk. Surya Citra Media is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  13,444  in Surya Citra Media on September 29, 2024 and sell it today you would earn a total of  1,956  from holding Surya Citra Media or generate 14.55% return on investment over 90 days.

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

Indofood Cbp Sukses  vs.  Surya Citra Media

Indofood Cbp Sukses

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Indofood Cbp 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.

Surya Citra Media

Risk-Adjusted Performance

10 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Surya Citra Media are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Surya Citra disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Indofood Cbp and Surya Citra

The main advantage of trading using opposite Indofood Cbp and Surya Citra positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Indofood Cbp position performs unexpectedly, Surya Citra 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 Surya Citra will offset losses from the drop in Surya Citra's long position.

The idea behind Indofood Cbp Sukses and Surya Citra Media 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.

Check out your portfolio center.

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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.