Correlation Between PT Indofood and PT Indo

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

Diversification Opportunities for PT Indofood and PT Indo

0.0

Correlation Coefficient

PT Indofood  PT Indo

Pay attention - limited upside

The 3 months correlation between INDF and IBOS is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding PT Indofood Sukses and PT Indo Boga in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PT Indo Boga 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 PT Indo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PT Indo Boga has no effect on the direction of PT Indofood i.e., PT Indofood and PT Indo go up and down completely randomly.

Pair Corralation between PT Indofood and PT Indo

If you would invest  635,198  in PT Indofood Sukses on October 10, 2024 and sell it today you would earn a total of  102,302  from holding PT Indofood Sukses or generate 16.11% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

PT Indofood Sukses  vs.  PT Indo Boga

PT Indofood Sukses

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in PT Indofood Sukses are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent forward-looking signals, PT Indofood is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

PT Indo Boga

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PT Indo Boga has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent forward-looking signals, PT Indo is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with PT Indofood and PT Indo

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

The idea behind PT Indofood Sukses and PT Indo Boga 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.