Correlation Between Indofood Sukses and Apple
Can any of the company-specific risk be diversified away by investing in both Indofood Sukses and Apple 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 Apple 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 Apple Inc, you can compare the effects of market volatilities on Indofood Sukses and Apple 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 Apple. Check out your portfolio center. Please also check ongoing floating volatility patterns of Indofood Sukses and Apple.
Diversification Opportunities for Indofood Sukses and Apple
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Indofood and Apple is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Indofood Sukses Makmur and Apple Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Apple Inc 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 Apple. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Apple Inc has no effect on the direction of Indofood Sukses i.e., Indofood Sukses and Apple go up and down completely randomly.
Pair Corralation between Indofood Sukses and Apple
Assuming the 90 days horizon Indofood Sukses Makmur is expected to generate 1.08 times more return on investment than Apple. However, Indofood Sukses is 1.08 times more volatile than Apple Inc. It trades about -0.19 of its potential returns per unit of risk. Apple Inc is currently generating about -0.21 per unit of risk. If you would invest 2,040 in Indofood Sukses Makmur on January 20, 2024 and sell it today you would lose (150.00) from holding Indofood Sukses Makmur or give up 7.35% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Indofood Sukses Makmur vs. Apple Inc
Performance |
| Timeline |
| Indofood Sukses Makmur |
| Apple Inc |
Indofood Sukses and Apple Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Indofood Sukses and Apple
The main advantage of trading using opposite Indofood Sukses and Apple positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Indofood Sukses position performs unexpectedly, Apple 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 Apple will offset losses from the drop in Apple'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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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