Correlation Between Indofood Sukses and TDH Holdings
Can any of the company-specific risk be diversified away by investing in both Indofood Sukses and TDH Holdings 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 TDH Holdings 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 TDH Holdings, you can compare the effects of market volatilities on Indofood Sukses and TDH Holdings 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 TDH Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Indofood Sukses and TDH Holdings.
Diversification Opportunities for Indofood Sukses and TDH Holdings
0.14 | Correlation Coefficient |
Average diversification
The 3 months correlation between Indofood and TDH is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Indofood Sukses Makmur and TDH Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TDH Holdings 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 TDH Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TDH Holdings has no effect on the direction of Indofood Sukses i.e., Indofood Sukses and TDH Holdings go up and down completely randomly.
Pair Corralation between Indofood Sukses and TDH Holdings
Assuming the 90 days horizon Indofood Sukses Makmur is expected to under-perform the TDH Holdings. But the pink sheet apears to be less risky and, when comparing its historical volatility, Indofood Sukses Makmur is 1.37 times less risky than TDH Holdings. The pink sheet trades about -0.2 of its potential returns per unit of risk. The TDH Holdings is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest 120.00 in TDH Holdings on January 24, 2024 and sell it today you would lose (3.00) from holding TDH Holdings or give up 2.5% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Indofood Sukses Makmur vs. TDH Holdings
Performance |
| Timeline |
| Indofood Sukses Makmur |
| TDH Holdings |
Indofood Sukses and TDH Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Indofood Sukses and TDH Holdings
The main advantage of trading using opposite Indofood Sukses and TDH Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Indofood Sukses position performs unexpectedly, TDH Holdings 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 TDH Holdings will offset losses from the drop in TDH Holdings' long position.| Indofood Sukses vs. Kellanova | Indofood Sukses vs. Lancaster Colony | Indofood Sukses vs. The A2 Milk | Indofood Sukses vs. Artisan Consumer Goods |
| TDH Holdings vs. Bunge Limited | TDH Holdings vs. Archer Daniels Midland | TDH Holdings vs. Fresh Del Monte | TDH Holdings vs. Limoneira Co |
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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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