Correlation Between Indofood Sukses and ATT
Can any of the company-specific risk be diversified away by investing in both Indofood Sukses and ATT 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 ATT 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 ATT Inc, you can compare the effects of market volatilities on Indofood Sukses and ATT 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 ATT. Check out your portfolio center. Please also check ongoing floating volatility patterns of Indofood Sukses and ATT.
Diversification Opportunities for Indofood Sukses and ATT
0.1 | Correlation Coefficient |
Average diversification
The 3 months correlation between Indofood and ATT is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Indofood Sukses Makmur and ATT Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ATT Inc 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 ATT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ATT Inc has no effect on the direction of Indofood Sukses i.e., Indofood Sukses and ATT go up and down completely randomly.
Pair Corralation between Indofood Sukses and ATT
Assuming the 90 days horizon Indofood Sukses Makmur is expected to under-perform the ATT. In addition to that, Indofood Sukses is 1.91 times more volatile than ATT Inc. It trades about -0.2 of its total potential returns per unit of risk. ATT Inc is currently generating about -0.16 per unit of volatility. If you would invest 1,684 in ATT Inc on January 23, 2024 and sell it today you would lose (53.00) from holding ATT Inc or give up 3.15% 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. ATT Inc
Performance |
| Timeline |
| Indofood Sukses Makmur |
| ATT Inc |
Indofood Sukses and ATT Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Indofood Sukses and ATT
The main advantage of trading using opposite Indofood Sukses and ATT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Indofood Sukses position performs unexpectedly, ATT 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 ATT will offset losses from the drop in ATT's long position.| Indofood Sukses vs. Kellanova | Indofood Sukses vs. Lancaster Colony | Indofood Sukses vs. The A2 Milk | Indofood Sukses 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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