Correlation Between PT Indofood and Sanurhasta Mitra

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

Diversification Opportunities for PT Indofood and Sanurhasta Mitra

0.5

Correlation Coefficient

PT Indofood  Sanurhasta Mitra

Very weak diversification

The 3 months correlation between INDF and Sanurhasta is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding PT Indofood Sukses and Sanurhasta Mitra PT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sanurhasta Mitra 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 Sanurhasta Mitra. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sanurhasta Mitra has no effect on the direction of PT Indofood i.e., PT Indofood and Sanurhasta Mitra go up and down completely randomly.

Pair Corralation between PT Indofood and Sanurhasta Mitra

Assuming the 90 days trading horizon PT Indofood is expected to generate 17.16 times less return on investment than Sanurhasta Mitra. But when comparing it to its historical volatility, PT Indofood Sukses is 3.48 times less risky than Sanurhasta Mitra. It trades about 0.07 of its potential returns per unit of risk. Sanurhasta Mitra PT is currently generating about 0.35 of returns per unit of risk over similar time horizon. If you would invest  2,000  in Sanurhasta Mitra PT on October 11, 2024 and sell it today you would earn a total of  3,900  from holding Sanurhasta Mitra PT or generate 195.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.33%
Values	Daily Returns

PT Indofood Sukses  vs.  Sanurhasta Mitra PT

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

Sanurhasta Mitra

Risk-Adjusted Performance

27 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Sanurhasta Mitra PT are ranked lower than 27 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Sanurhasta Mitra disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with PT Indofood and Sanurhasta Mitra

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

The idea behind PT Indofood Sukses and Sanurhasta Mitra PT 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.