Correlation Between PT Indofood and Sysco

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

Diversification Opportunities for PT Indofood and Sysco

0.79

Correlation Coefficient

PT Indofood  Sysco

Poor diversification

The 3 months correlation between ISM and Sysco is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding PT Indofood Sukses and Sysco in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sysco 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 Sysco. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sysco has no effect on the direction of PT Indofood i.e., PT Indofood and Sysco go up and down completely randomly.

Pair Corralation between PT Indofood and Sysco

Assuming the 90 days horizon PT Indofood Sukses is expected to generate 3.26 times more return on investment than Sysco. However, PT Indofood is 3.26 times more volatile than Sysco. It trades about 0.06 of its potential returns per unit of risk. Sysco is currently generating about 0.06 per unit of risk. If you would invest  34.00  in PT Indofood Sukses on September 22, 2024 and sell it today you would earn a total of  9.00  from holding PT Indofood Sukses or generate 26.47% return on investment over 90 days.

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

PT Indofood Sukses  vs.  Sysco

PT Indofood Sukses

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in PT Indofood Sukses are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, PT Indofood may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Sysco

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Sysco are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Sysco may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with PT Indofood and Sysco

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

The idea behind PT Indofood Sukses and Sysco 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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.