Correlation Between Indofood Sukses and MetLife
Can any of the company-specific risk be diversified away by investing in both Indofood Sukses and MetLife 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 MetLife 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 MetLife, you can compare the effects of market volatilities on Indofood Sukses and MetLife 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 MetLife. Check out your portfolio center. Please also check ongoing floating volatility patterns of Indofood Sukses and MetLife.
Diversification Opportunities for Indofood Sukses and MetLife
0.06 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Indofood and MetLife is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Indofood Sukses Makmur and MetLife in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MetLife 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 MetLife. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MetLife has no effect on the direction of Indofood Sukses i.e., Indofood Sukses and MetLife go up and down completely randomly.
Pair Corralation between Indofood Sukses and MetLife
Assuming the 90 days horizon Indofood Sukses Makmur is expected to under-perform the MetLife. In addition to that, Indofood Sukses is 1.39 times more volatile than MetLife. It trades about -0.1 of its total potential returns per unit of risk. MetLife is currently generating about 0.05 per unit of volatility. If you would invest 7,032 in MetLife on January 26, 2024 and sell it today you would earn a total of 240.00 from holding MetLife or generate 3.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Indofood Sukses Makmur vs. MetLife
Performance |
| Timeline |
| Indofood Sukses Makmur |
| MetLife |
Indofood Sukses and MetLife Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Indofood Sukses and MetLife
The main advantage of trading using opposite Indofood Sukses and MetLife positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Indofood Sukses position performs unexpectedly, MetLife 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 MetLife will offset losses from the drop in MetLife's long position.| Indofood Sukses vs. Kellanova | Indofood Sukses vs. Lancaster Colony | Indofood Sukses vs. The A2 Milk | Indofood Sukses vs. Artisan Consumer Goods |
| MetLife vs. Lincoln National | MetLife vs. Aflac Incorporated | MetLife vs. Unum Group | MetLife vs. Manulife Financial Corp |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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