Correlation Between PT Indofood and Prestige Cars

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

Diversification Opportunities for PT Indofood and Prestige Cars

0.0

Correlation Coefficient

PT Indofood  Prestige Cars

Pay attention - limited upside

The 3 months correlation between PIFMF and Prestige is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding PT Indofood Sukses and Prestige Cars International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prestige Cars Intern 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 Prestige Cars. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Prestige Cars Intern has no effect on the direction of PT Indofood i.e., PT Indofood and Prestige Cars go up and down completely randomly.

Pair Corralation between PT Indofood and Prestige Cars

If you would invest  0.50  in Prestige Cars International on December 29, 2024 and sell it today you would earn a total of  0.15  from holding Prestige Cars International or generate 30.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

PT Indofood Sukses  vs.  Prestige Cars International

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

Prestige Cars Intern

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Prestige Cars International are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather inconsistent technical and fundamental indicators, Prestige Cars exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with PT Indofood and Prestige Cars

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

The idea behind PT Indofood Sukses and Prestige Cars International 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.

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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.