Correlation Between PT Indofood and Performance Food

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

Diversification Opportunities for PT Indofood and Performance Food

0.56

Correlation Coefficient

PT Indofood  Performance Food

Very weak diversification

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

Pair Corralation between PT Indofood and Performance Food

Assuming the 90 days trading horizon PT Indofood Sukses is expected to under-perform the Performance Food. In addition to that, PT Indofood is 1.4 times more volatile than Performance Food Group. It trades about -0.12 of its total potential returns per unit of risk. Performance Food Group is currently generating about -0.13 per unit of volatility. If you would invest  8,050  in Performance Food Group on December 22, 2024 and sell it today you would lose (1,000.00) from holding Performance Food Group or give up 12.42% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.36%
Values	Daily Returns

PT Indofood Sukses  vs.  Performance Food Group

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. In spite of uncertain performance in the last few months, the Stock's primary indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Performance Food

Risk-Adjusted Performance

Very Weak

Over the last 90 days Performance Food Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with PT Indofood and Performance Food

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

The idea behind PT Indofood Sukses and Performance Food Group 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..