Correlation Between PT Indofood and Humpuss Intermoda

Can any of the company-specific risk be diversified away by investing in both PT Indofood and Humpuss Intermoda 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 Humpuss Intermoda 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 Humpuss Intermoda Transportasi, you can compare the effects of market volatilities on PT Indofood and Humpuss Intermoda 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 Humpuss Intermoda. Check out your portfolio center. Please also check ongoing floating volatility patterns of PT Indofood and Humpuss Intermoda.

Diversification Opportunities for PT Indofood and Humpuss Intermoda

0.56

Correlation Coefficient

PT Indofood  Humpuss Intermoda

Very weak diversification

The 3 months correlation between INDF and Humpuss is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding PT Indofood Sukses and Humpuss Intermoda Transportasi in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Humpuss Intermoda 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 Humpuss Intermoda. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Humpuss Intermoda has no effect on the direction of PT Indofood i.e., PT Indofood and Humpuss Intermoda go up and down completely randomly.

Pair Corralation between PT Indofood and Humpuss Intermoda

Assuming the 90 days trading horizon PT Indofood Sukses is expected to generate 0.28 times more return on investment than Humpuss Intermoda. However, PT Indofood Sukses is 3.55 times less risky than Humpuss Intermoda. It trades about -0.05 of its potential returns per unit of risk. Humpuss Intermoda Transportasi is currently generating about -0.23 per unit of risk. If you would invest  770,000  in PT Indofood Sukses on December 30, 2024 and sell it today you would lose (60,000) from holding PT Indofood Sukses or give up 7.79% of portfolio value over 90 days.

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

PT Indofood Sukses  vs.  Humpuss Intermoda Transportasi

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.

Humpuss Intermoda

Risk-Adjusted Performance

Very Weak

Over the last 90 days Humpuss Intermoda Transportasi has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's forward-looking signals remain quite persistent which may send shares a bit higher in April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with PT Indofood and Humpuss Intermoda

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

The idea behind PT Indofood Sukses and Humpuss Intermoda Transportasi 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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.