Correlation Between Kerry Group and Indofood Sukses

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Can any of the company-specific risk be diversified away by investing in both Kerry Group and Indofood Sukses 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 Kerry Group and Indofood Sukses into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kerry Group PLC and Indofood Sukses Makmur, you can compare the effects of market volatilities on Kerry Group and Indofood Sukses 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 Kerry Group with a short position of Indofood Sukses. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kerry Group and Indofood Sukses.

Diversification Opportunities for Kerry Group and Indofood Sukses

-0.19
  Correlation Coefficient

Good diversification

The 3 months correlation between Kerry and Indofood is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Kerry Group PLC and Indofood Sukses Makmur in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Indofood Sukses Makmur and Kerry Group 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 Kerry Group PLC are associated (or correlated) with Indofood Sukses. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Indofood Sukses Makmur has no effect on the direction of Kerry Group i.e., Kerry Group and Indofood Sukses go up and down completely randomly.

Pair Corralation between Kerry Group and Indofood Sukses

Assuming the 90 days horizon Kerry Group PLC is expected to generate 0.77 times more return on investment than Indofood Sukses. However, Kerry Group PLC is 1.31 times less risky than Indofood Sukses. It trades about -0.03 of its potential returns per unit of risk. Indofood Sukses Makmur is currently generating about -0.18 per unit of risk. If you would invest  8,703  in Kerry Group PLC on December 30, 2023 and sell it today you would lose (55.00) from holding Kerry Group PLC or give up 0.63% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Kerry Group PLC  vs.  Indofood Sukses Makmur

 Performance 
       Timeline  
Kerry Group PLC 

Risk-Adjusted Performance

2 of 100

 
Low
 
High
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in Kerry Group PLC are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, Kerry Group is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.
Indofood Sukses Makmur 

Risk-Adjusted Performance

0 of 100

 
Low
 
High
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.

Kerry Group and Indofood Sukses Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Kerry Group and Indofood Sukses

The main advantage of trading using opposite Kerry Group and Indofood Sukses positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kerry Group position performs unexpectedly, Indofood Sukses 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 Indofood Sukses will offset losses from the drop in Indofood Sukses' long position.
The idea behind Kerry Group PLC and Indofood Sukses Makmur 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.

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