Correlation Between Unilever Indonesia and Fks Multi

Can any of the company-specific risk be diversified away by investing in both Unilever Indonesia and Fks Multi 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 Unilever Indonesia and Fks Multi into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Unilever Indonesia Tbk and Fks Multi Agro, you can compare the effects of market volatilities on Unilever Indonesia and Fks Multi 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 Unilever Indonesia with a short position of Fks Multi. Check out your portfolio center. Please also check ongoing floating volatility patterns of Unilever Indonesia and Fks Multi.

Diversification Opportunities for Unilever Indonesia and Fks Multi

-0.49

Correlation Coefficient

Unilever Indonesia  Fks Multi

Very good diversification

The 3 months correlation between Unilever and Fks is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Unilever Indonesia Tbk and Fks Multi Agro in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fks Multi Agro and Unilever Indonesia 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 Unilever Indonesia Tbk are associated (or correlated) with Fks Multi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fks Multi Agro has no effect on the direction of Unilever Indonesia i.e., Unilever Indonesia and Fks Multi go up and down completely randomly.

Pair Corralation between Unilever Indonesia and Fks Multi

Assuming the 90 days trading horizon Unilever Indonesia Tbk is expected to under-perform the Fks Multi. But the stock apears to be less risky and, when comparing its historical volatility, Unilever Indonesia Tbk is 1.23 times less risky than Fks Multi. The stock trades about -0.06 of its potential returns per unit of risk. The Fks Multi Agro is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  795,000  in Fks Multi Agro on September 12, 2024 and sell it today you would earn a total of  275,000  from holding Fks Multi Agro or generate 34.59% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	96.83%
Values	Daily Returns

Unilever Indonesia Tbk  vs.  Fks Multi Agro

Unilever Indonesia Tbk

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Unilever Indonesia Tbk has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's forward-looking signals remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Fks Multi Agro

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Fks Multi Agro are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Fks Multi disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Unilever Indonesia and Fks Multi

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

The idea behind Unilever Indonesia Tbk and Fks Multi Agro 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.