Correlation Between Indofood Sukses and White River

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

Diversification Opportunities for Indofood Sukses and White River

-0.35

Correlation Coefficient

Indofood Sukses  White River

Very good diversification

The 3 months correlation between Indofood and White is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Indofood Sukses Makmur and White River Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on White River Energy 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 White River. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of White River Energy has no effect on the direction of Indofood Sukses i.e., Indofood Sukses and White River go up and down completely randomly.

Pair Corralation between Indofood Sukses and White River

Assuming the 90 days horizon Indofood Sukses is expected to generate 11.84 times less return on investment than White River. But when comparing it to its historical volatility, Indofood Sukses Makmur is 7.72 times less risky than White River. It trades about 0.02 of its potential returns per unit of risk. White River Energy is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  250.00  in White River Energy on October 7, 2024 and sell it today you would lose (250.00) from holding White River Energy or give up 100.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.8%
Values	Daily Returns

Indofood Sukses Makmur  vs.  White River Energy

Indofood Sukses Makmur

Risk-Adjusted Performance

0 of 100

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 latest stock price disturbance, may contribute to short-term losses for the investors.

White River Energy

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days White River Energy has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in February 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with Indofood Sukses and White River

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

The idea behind Indofood Sukses Makmur and White River Energy 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.