Correlation Between PT Indofood and Fortune Mate

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

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

Diversification Opportunities for PT Indofood and Fortune Mate

0.55

Correlation Coefficient

PT Indofood  Fortune Mate

Very weak diversification

The 3 months correlation between INDF and Fortune is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding PT Indofood Sukses and Fortune Mate Indonesia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fortune Mate Indonesia and PT Indofood 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 PT Indofood Sukses are associated (or correlated) with Fortune Mate. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fortune Mate Indonesia has no effect on the direction of PT Indofood i.e., PT Indofood and Fortune Mate go up and down completely randomly.

Pair Corralation between PT Indofood and Fortune Mate

If you would invest  54,500  in Fortune Mate Indonesia on October 11, 2024 and sell it today you would earn a total of  0.00  from holding Fortune Mate Indonesia or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	94.74%
Values	Daily Returns

PT Indofood Sukses  vs.  Fortune Mate Indonesia

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 quite weak forward-looking signals, PT Indofood may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Fortune Mate Indonesia

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Fortune Mate Indonesia are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Fortune Mate disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with PT Indofood and Fortune Mate

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

The idea behind PT Indofood Sukses and Fortune Mate Indonesia 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 Stocks Directory module to find actively traded stocks across global markets.