Correlation Between Indofood Sukses and Alcoa Corp
Can any of the company-specific risk be diversified away by investing in both Indofood Sukses and Alcoa Corp 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 Alcoa Corp 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 Alcoa Corp, you can compare the effects of market volatilities on Indofood Sukses and Alcoa Corp 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 Alcoa Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Indofood Sukses and Alcoa Corp.
Diversification Opportunities for Indofood Sukses and Alcoa Corp
-0.44 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Indofood and Alcoa is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Indofood Sukses Makmur and Alcoa Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alcoa Corp 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 Alcoa Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alcoa Corp has no effect on the direction of Indofood Sukses i.e., Indofood Sukses and Alcoa Corp go up and down completely randomly.
Pair Corralation between Indofood Sukses and Alcoa Corp
Assuming the 90 days horizon Indofood Sukses Makmur is expected to generate 0.61 times more return on investment than Alcoa Corp. However, Indofood Sukses Makmur is 1.65 times less risky than Alcoa Corp. It trades about 0.0 of its potential returns per unit of risk. Alcoa Corp is currently generating about -0.01 per unit of risk. If you would invest 2,010 in Indofood Sukses Makmur on January 25, 2024 and sell it today you would lose (120.00) from holding Indofood Sukses Makmur or give up 5.97% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 97.98% |
| Values | Daily Returns |
Indofood Sukses Makmur vs. Alcoa Corp
Performance |
| Timeline |
| Indofood Sukses Makmur |
| Alcoa Corp |
Indofood Sukses and Alcoa Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Indofood Sukses and Alcoa Corp
The main advantage of trading using opposite Indofood Sukses and Alcoa Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Indofood Sukses position performs unexpectedly, Alcoa Corp 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 Alcoa Corp will offset losses from the drop in Alcoa Corp's long position.| Indofood Sukses vs. Kellanova | Indofood Sukses vs. Lancaster Colony | Indofood Sukses vs. The A2 Milk | Indofood Sukses vs. Artisan Consumer Goods |
Check out your portfolio center.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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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