Correlation Between Indofood Sukses and NH Foods
Can any of the company-specific risk be diversified away by investing in both Indofood Sukses and NH Foods 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 NH Foods 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 NH Foods Ltd, you can compare the effects of market volatilities on Indofood Sukses and NH Foods 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 NH Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of Indofood Sukses and NH Foods.
Diversification Opportunities for Indofood Sukses and NH Foods
-0.67 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Indofood and NIPMY is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Indofood Sukses Makmur and NH Foods Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NH Foods 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 NH Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NH Foods has no effect on the direction of Indofood Sukses i.e., Indofood Sukses and NH Foods go up and down completely randomly.
Pair Corralation between Indofood Sukses and NH Foods
Assuming the 90 days horizon Indofood Sukses Makmur is expected to generate 1.18 times more return on investment than NH Foods. However, Indofood Sukses is 1.18 times more volatile than NH Foods Ltd. It trades about 0.0 of its potential returns per unit of risk. NH Foods Ltd is currently generating about -0.01 per unit of risk. If you would invest 2,179 in Indofood Sukses Makmur on January 25, 2024 and sell it today you would lose (284.00) from holding Indofood Sukses Makmur or give up 13.03% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 99.12% |
| Values | Daily Returns |
Indofood Sukses Makmur vs. NH Foods Ltd
Performance |
| Timeline |
| Indofood Sukses Makmur |
| NH Foods |
Indofood Sukses and NH Foods Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Indofood Sukses and NH Foods
The main advantage of trading using opposite Indofood Sukses and NH Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Indofood Sukses position performs unexpectedly, NH Foods 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 NH Foods will offset losses from the drop in NH Foods' long position.| Indofood Sukses vs. Nichirei | Indofood Sukses vs. Kellanova | Indofood Sukses vs. Lancaster Colony | Indofood Sukses vs. The A2 Milk |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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