Correlation Between PT Indofood and BJs Restaurants

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

Diversification Opportunities for PT Indofood and BJs Restaurants

0.53

Correlation Coefficient

PT Indofood  BJs Restaurants

Very weak diversification

The 3 months correlation between ISM and BJs is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding PT Indofood Sukses and BJs Restaurants in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BJs Restaurants 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 BJs Restaurants. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BJs Restaurants has no effect on the direction of PT Indofood i.e., PT Indofood and BJs Restaurants go up and down completely randomly.

Pair Corralation between PT Indofood and BJs Restaurants

Assuming the 90 days horizon PT Indofood Sukses is expected to under-perform the BJs Restaurants. In addition to that, PT Indofood is 1.99 times more volatile than BJs Restaurants. It trades about -0.03 of its total potential returns per unit of risk. BJs Restaurants is currently generating about 0.0 per unit of volatility. If you would invest  3,320  in BJs Restaurants on December 28, 2024 and sell it today you would lose (40.00) from holding BJs Restaurants or give up 1.2% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.41%
Values	Daily Returns

PT Indofood Sukses  vs.  BJs Restaurants

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 fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

BJs Restaurants

Risk-Adjusted Performance

Very Weak

Over the last 90 days BJs Restaurants has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, BJs Restaurants is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with PT Indofood and BJs Restaurants

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

The idea behind PT Indofood Sukses and BJs Restaurants 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.