Correlation Between Indofood Sukses and International Business
Can any of the company-specific risk be diversified away by investing in both Indofood Sukses and International Business 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 International Business 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 International Business Machines, you can compare the effects of market volatilities on Indofood Sukses and International Business 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 International Business. Check out your portfolio center. Please also check ongoing floating volatility patterns of Indofood Sukses and International Business.
Diversification Opportunities for Indofood Sukses and International Business
-0.08 | Correlation Coefficient |
Good diversification
The 3 months correlation between Indofood and International is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Indofood Sukses Makmur and International Business Machine in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on International Business 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 International Business. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of International Business has no effect on the direction of Indofood Sukses i.e., Indofood Sukses and International Business go up and down completely randomly.
Pair Corralation between Indofood Sukses and International Business
Assuming the 90 days horizon Indofood Sukses is expected to generate 14.14 times less return on investment than International Business. In addition to that, Indofood Sukses is 1.66 times more volatile than International Business Machines. It trades about 0.0 of its total potential returns per unit of risk. International Business Machines is currently generating about 0.07 per unit of volatility. If you would invest 12,035 in International Business Machines on January 19, 2024 and sell it today you would earn a total of 6,275 from holding International Business Machines or generate 52.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 98.18% |
| Values | Daily Returns |
Indofood Sukses Makmur vs. International Business Machine
Performance |
| Timeline |
| Indofood Sukses Makmur |
| International Business |
Indofood Sukses and International Business Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Indofood Sukses and International Business
The main advantage of trading using opposite Indofood Sukses and International Business positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Indofood Sukses position performs unexpectedly, International Business 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 International Business will offset losses from the drop in International Business' long position.| Indofood Sukses vs. Kellanova | Indofood Sukses vs. Lancaster Colony | Indofood Sukses vs. The A2 Milk | Indofood Sukses vs. Altavoz Entertainment |
| International Business vs. Pfizer Inc | International Business vs. Home Federal Bancorp | International Business vs. Betterware De Mexico | International Business vs. Heartland Financial USA |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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