Correlation Between Indofood Sukses and Universal Robina

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

Diversification Opportunities for Indofood Sukses and Universal Robina

-0.14
  Correlation Coefficient

Good diversification

The 3 months correlation between Indofood and Universal is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Indofood Sukses Makmur and Universal Robina Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Universal Robina Corp 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 Universal Robina. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Universal Robina Corp has no effect on the direction of Indofood Sukses i.e., Indofood Sukses and Universal Robina go up and down completely randomly.

Pair Corralation between Indofood Sukses and Universal Robina

Assuming the 90 days horizon Indofood Sukses is expected to generate 2.57 times less return on investment than Universal Robina. But when comparing it to its historical volatility, Indofood Sukses Makmur is 2.14 times less risky than Universal Robina. It trades about 0.01 of its potential returns per unit of risk. Universal Robina Corp is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  2,319  in Universal Robina Corp on December 30, 2023 and sell it today you would lose (259.00) from holding Universal Robina Corp or give up 11.17% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy97.77%
ValuesDaily Returns

Indofood Sukses Makmur  vs.  Universal Robina Corp

 Performance 
       Timeline  
Indofood Sukses Makmur 

Risk-Adjusted Performance

0 of 100

 
Low
 
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.
Universal Robina Corp 

Risk-Adjusted Performance

6 of 100

 
Low
 
High
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in Universal Robina Corp are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady fundamental drivers, Universal Robina may actually be approaching a critical reversion point that can send shares even higher in April 2024.

Indofood Sukses and Universal Robina Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Indofood Sukses and Universal Robina

The main advantage of trading using opposite Indofood Sukses and Universal Robina positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Indofood Sukses position performs unexpectedly, Universal Robina 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 Universal Robina will offset losses from the drop in Universal Robina's long position.
The idea behind Indofood Sukses Makmur and Universal Robina Corp 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.
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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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..

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