Correlation Between Indofood Sukses and Quisitive Technology

Can any of the company-specific risk be diversified away by investing in both Indofood Sukses and Quisitive Technology 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 Indofood Sukses and Quisitive Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Indofood Sukses Makmur and Quisitive Technology Solutions, you can compare the effects of market volatilities on Indofood Sukses and Quisitive Technology 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 Indofood Sukses with a short position of Quisitive Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Indofood Sukses and Quisitive Technology.

Diversification Opportunities for Indofood Sukses and Quisitive Technology

-0.36

Correlation Coefficient

Indofood Sukses  Quisitive Technology

Very good diversification

The 3 months correlation between Indofood and Quisitive is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Indofood Sukses Makmur and Quisitive Technology Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Quisitive Technology and Indofood Sukses 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 Indofood Sukses Makmur are associated (or correlated) with Quisitive Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Quisitive Technology has no effect on the direction of Indofood Sukses i.e., Indofood Sukses and Quisitive Technology go up and down completely randomly.

Pair Corralation between Indofood Sukses and Quisitive Technology

Assuming the 90 days horizon Indofood Sukses is expected to generate 187.47 times less return on investment than Quisitive Technology. But when comparing it to its historical volatility, Indofood Sukses Makmur is 1.71 times less risky than Quisitive Technology. It trades about 0.0 of its potential returns per unit of risk. Quisitive Technology Solutions is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  24.00  in Quisitive Technology Solutions on December 28, 2024 and sell it today you would earn a total of  15.00  from holding Quisitive Technology Solutions or generate 62.5% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	86.67%
Values	Daily Returns

Indofood Sukses Makmur  vs.  Quisitive Technology Solutions

Indofood Sukses Makmur

Risk-Adjusted Performance

Very Weak

Over the last 90 days Indofood Sukses Makmur has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong primary indicators, Indofood Sukses is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Quisitive Technology

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Quisitive Technology Solutions are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite nearly abnormal basic indicators, Quisitive Technology reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Indofood Sukses and Quisitive Technology

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

The idea behind Indofood Sukses Makmur and Quisitive Technology Solutions 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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.