Correlation Between Indofood Sukses and Tate Lyle
Can any of the company-specific risk be diversified away by investing in both Indofood Sukses and Tate Lyle 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 Tate Lyle 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 Tate Lyle PLC, you can compare the effects of market volatilities on Indofood Sukses and Tate Lyle 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 Tate Lyle. Check out your portfolio center. Please also check ongoing floating volatility patterns of Indofood Sukses and Tate Lyle.
Diversification Opportunities for Indofood Sukses and Tate Lyle
0.07 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Indofood and Tate is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Indofood Sukses Makmur and Tate Lyle PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tate Lyle PLC 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 Tate Lyle. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tate Lyle PLC has no effect on the direction of Indofood Sukses i.e., Indofood Sukses and Tate Lyle go up and down completely randomly.
Pair Corralation between Indofood Sukses and Tate Lyle
Assuming the 90 days horizon Indofood Sukses Makmur is expected to under-perform the Tate Lyle. In addition to that, Indofood Sukses is 1.22 times more volatile than Tate Lyle PLC. It trades about -0.2 of its total potential returns per unit of risk. Tate Lyle PLC is currently generating about 0.09 per unit of volatility. If you would invest 3,019 in Tate Lyle PLC on January 23, 2024 and sell it today you would earn a total of 74.00 from holding Tate Lyle PLC or generate 2.45% 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. Tate Lyle PLC
Performance |
| Timeline |
| Indofood Sukses Makmur |
| Tate Lyle PLC |
Indofood Sukses and Tate Lyle Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Indofood Sukses and Tate Lyle
The main advantage of trading using opposite Indofood Sukses and Tate Lyle positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Indofood Sukses position performs unexpectedly, Tate Lyle 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 Tate Lyle will offset losses from the drop in Tate Lyle's long position.| Indofood Sukses vs. Kellanova | Indofood Sukses vs. Lancaster Colony | Indofood Sukses vs. The A2 Milk | Indofood Sukses vs. Artisan Consumer Goods |
| Tate Lyle vs. Sun Life Financial | Tate Lyle vs. Roth CH Acquisition | Tate Lyle vs. Signal Advance | Tate Lyle vs. Video River Networks |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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