Correlation Between Indofood Sukses and Lery Seafood
Can any of the company-specific risk be diversified away by investing in both Indofood Sukses and Lery Seafood 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 Lery Seafood 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 Lery Seafood Group, you can compare the effects of market volatilities on Indofood Sukses and Lery Seafood 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 Lery Seafood. Check out your portfolio center. Please also check ongoing floating volatility patterns of Indofood Sukses and Lery Seafood.
Diversification Opportunities for Indofood Sukses and Lery Seafood
-0.13 | Correlation Coefficient |
Good diversification
The 3 months correlation between Indofood and Lery is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Indofood Sukses Makmur and Lery Seafood Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lery Seafood Group 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 Lery Seafood. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lery Seafood Group has no effect on the direction of Indofood Sukses i.e., Indofood Sukses and Lery Seafood go up and down completely randomly.
Pair Corralation between Indofood Sukses and Lery Seafood
Assuming the 90 days horizon Indofood Sukses Makmur is expected to under-perform the Lery Seafood. In addition to that, Indofood Sukses is 2.51 times more volatile than Lery Seafood Group. It trades about -0.17 of its total potential returns per unit of risk. Lery Seafood Group is currently generating about -0.22 per unit of volatility. If you would invest 446.00 in Lery Seafood Group on January 26, 2024 and sell it today you would lose (16.00) from holding Lery Seafood Group or give up 3.59% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Indofood Sukses Makmur vs. Lery Seafood Group
Performance |
| Timeline |
| Indofood Sukses Makmur |
| Lery Seafood Group |
Indofood Sukses and Lery Seafood Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Indofood Sukses and Lery Seafood
The main advantage of trading using opposite Indofood Sukses and Lery Seafood positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Indofood Sukses position performs unexpectedly, Lery Seafood 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 Lery Seafood will offset losses from the drop in Lery Seafood's long position.| Indofood Sukses vs. Kellanova | Indofood Sukses vs. Lancaster Colony | Indofood Sukses vs. The A2 Milk | Indofood Sukses vs. Artisan Consumer Goods |
| Lery Seafood vs. Kellanova | Lery Seafood vs. Lancaster Colony | Lery Seafood vs. The A2 Milk | Lery Seafood 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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