Correlation Between Indofood Sukses and Kikkoman
Can any of the company-specific risk be diversified away by investing in both Indofood Sukses and Kikkoman 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 Kikkoman 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 Kikkoman, you can compare the effects of market volatilities on Indofood Sukses and Kikkoman 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 Kikkoman. Check out your portfolio center. Please also check ongoing floating volatility patterns of Indofood Sukses and Kikkoman.
Diversification Opportunities for Indofood Sukses and Kikkoman
0.11 | Correlation Coefficient |
Average diversification
The 3 months correlation between Indofood and Kikkoman is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Indofood Sukses Makmur and Kikkoman in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kikkoman 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 Kikkoman. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kikkoman has no effect on the direction of Indofood Sukses i.e., Indofood Sukses and Kikkoman go up and down completely randomly.
Pair Corralation between Indofood Sukses and Kikkoman
Assuming the 90 days horizon Indofood Sukses Makmur is expected to generate 0.06 times more return on investment than Kikkoman. However, Indofood Sukses Makmur is 16.14 times less risky than Kikkoman. It trades about -0.19 of its potential returns per unit of risk. Kikkoman is currently generating about -0.22 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 (151.00) from holding Indofood Sukses Makmur or give up 7.4% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Indofood Sukses Makmur vs. Kikkoman
Performance |
| Timeline |
| Indofood Sukses Makmur |
| Kikkoman |
Indofood Sukses and Kikkoman Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Indofood Sukses and Kikkoman
The main advantage of trading using opposite Indofood Sukses and Kikkoman positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Indofood Sukses position performs unexpectedly, Kikkoman 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 Kikkoman will offset losses from the drop in Kikkoman's long position.| Indofood Sukses vs. Kellanova | Indofood Sukses vs. Lancaster Colony | Indofood Sukses vs. The A2 Milk | Indofood Sukses vs. Artisan Consumer Goods |
| Kikkoman vs. Kellanova | Kikkoman vs. Lancaster Colony | Kikkoman vs. The A2 Milk | Kikkoman 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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