Correlation Between Indofood Sukses and Reliv International

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Can any of the company-specific risk be diversified away by investing in both Indofood Sukses and Reliv International 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 Reliv International 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 Reliv International, you can compare the effects of market volatilities on Indofood Sukses and Reliv International 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 Reliv International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Indofood Sukses and Reliv International.

Diversification Opportunities for Indofood Sukses and Reliv International

-0.09
  Correlation Coefficient

Good diversification

The 3 months correlation between Indofood and Reliv is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Indofood Sukses Makmur and Reliv International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Reliv International 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 Reliv International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Reliv International has no effect on the direction of Indofood Sukses i.e., Indofood Sukses and Reliv International go up and down completely randomly.

Pair Corralation between Indofood Sukses and Reliv International

If you would invest  462.00  in Reliv International on December 29, 2023 and sell it today you would earn a total of  0.00  from holding Reliv International or generate 0.0% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy4.55%
ValuesDaily Returns

Indofood Sukses Makmur  vs.  Reliv International

 Performance 
       Timeline  
Indofood Sukses Makmur 

Risk-Adjusted Performance

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High
Very Weak
Over the last 90 days Indofood Sukses Makmur has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong primary indicators, Indofood Sukses is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.
Reliv International 

Risk-Adjusted Performance

0 of 100

 
Low
 
High
Very Weak
Over the last 90 days Reliv International has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable essential indicators, Reliv International is not utilizing all of its potentials. The recent stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Indofood Sukses and Reliv International Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Indofood Sukses and Reliv International

The main advantage of trading using opposite Indofood Sukses and Reliv International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Indofood Sukses position performs unexpectedly, Reliv International 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 Reliv International will offset losses from the drop in Reliv International's long position.
The idea behind Indofood Sukses Makmur and Reliv International pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.

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