Correlation Between Lundin Gold and Indofood Sukses

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

Diversification Opportunities for Lundin Gold and Indofood Sukses

-0.11
  Correlation Coefficient

Good diversification

The 3 months correlation between Lundin and Indofood is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Lundin Gold 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 Lundin Gold 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 Lundin Gold 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 Lundin Gold i.e., Lundin Gold and Indofood Sukses go up and down completely randomly.

Pair Corralation between Lundin Gold and Indofood Sukses

Assuming the 90 days trading horizon Lundin Gold is expected to generate 1.69 times more return on investment than Indofood Sukses. However, Lundin Gold is 1.69 times more volatile than Indofood Sukses Makmur. It trades about 0.41 of its potential returns per unit of risk. Indofood Sukses Makmur is currently generating about -0.17 per unit of risk. If you would invest  1,532  in Lundin Gold on December 29, 2023 and sell it today you would earn a total of  316.00  from holding Lundin Gold or generate 20.63% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy95.65%
ValuesDaily Returns

Lundin Gold  vs.  Indofood Sukses Makmur

 Performance 
       Timeline  
Lundin Gold 

Risk-Adjusted Performance

6 of 100

 
Low
 
High
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in Lundin Gold are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating technical and fundamental indicators, Lundin Gold displayed solid returns over the last few months and may actually be approaching a breakup point.
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.

Lundin Gold and Indofood Sukses Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Lundin Gold and Indofood Sukses

The main advantage of trading using opposite Lundin Gold and Indofood Sukses positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lundin Gold 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 Lundin Gold 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.

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