Correlation Between Kellogg and PT Indofood
Can any of the company-specific risk be diversified away by investing in both Kellogg and PT Indofood 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 Kellogg and PT Indofood into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kellogg Company and PT Indofood Sukses, you can compare the effects of market volatilities on Kellogg and PT Indofood 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 Kellogg with a short position of PT Indofood. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kellogg and PT Indofood.
Diversification Opportunities for Kellogg and PT Indofood
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Kellogg and ISM is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Kellogg Company and PT Indofood Sukses in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PT Indofood Sukses and Kellogg 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 Kellogg Company are associated (or correlated) with PT Indofood. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PT Indofood Sukses has no effect on the direction of Kellogg i.e., Kellogg and PT Indofood go up and down completely randomly.
Pair Corralation between Kellogg and PT Indofood
Assuming the 90 days horizon Kellogg Company is expected to generate 0.18 times more return on investment than PT Indofood. However, Kellogg Company is 5.54 times less risky than PT Indofood. It trades about -0.01 of its potential returns per unit of risk. PT Indofood Sukses is currently generating about -0.03 per unit of risk. If you would invest 7,670 in Kellogg Company on December 28, 2024 and sell it today you would lose (60.00) from holding Kellogg Company or give up 0.78% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 98.41% |
Values | Daily Returns |
Kellogg Company vs. PT Indofood Sukses
Performance |
Timeline |
Kellogg Company |
PT Indofood Sukses |
Kellogg and PT Indofood Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Kellogg and PT Indofood
The main advantage of trading using opposite Kellogg and PT Indofood positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kellogg position performs unexpectedly, PT Indofood 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 Indofood will offset losses from the drop in PT Indofood's long position.Kellogg vs. Agricultural Bank of | Kellogg vs. SCANSOURCE | Kellogg vs. USWE SPORTS AB | Kellogg vs. Sterling Construction |
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Check out your portfolio center.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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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