Correlation Between PT Indofood and NTT Data

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

Diversification Opportunities for PT Indofood and NTT Data

-0.69

Correlation Coefficient

PT Indofood  NTT Data

Excellent diversification

The 3 months correlation between PIFMF and NTT is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding PT Indofood Sukses and NTT Data Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NTT Data Corp 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 NTT Data. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NTT Data Corp has no effect on the direction of PT Indofood i.e., PT Indofood and NTT Data go up and down completely randomly.

Pair Corralation between PT Indofood and NTT Data

If you would invest  1,719  in NTT Data Corp on September 16, 2024 and sell it today you would earn a total of  185.00  from holding NTT Data Corp or generate 10.76% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	1.54%
Values	Daily Returns

PT Indofood Sukses  vs.  NTT Data Corp

PT Indofood Sukses

Risk-Adjusted Performance

0 of 100

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 nearly stable primary indicators, PT Indofood is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

NTT Data Corp

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in NTT Data Corp are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating basic indicators, NTT Data showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with PT Indofood and NTT Data

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

The idea behind PT Indofood Sukses and NTT Data Corp 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.