Correlation Between Indofood Sukses and WH Group
Can any of the company-specific risk be diversified away by investing in both Indofood Sukses and WH Group 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 WH Group 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 WH Group Ltd, you can compare the effects of market volatilities on Indofood Sukses and WH Group 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 WH Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Indofood Sukses and WH Group.
Diversification Opportunities for Indofood Sukses and WH Group
-0.18 | Correlation Coefficient |
Good diversification
The 3 months correlation between Indofood and WHGLY is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Indofood Sukses Makmur and WH Group Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WH Group 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 WH Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WH Group has no effect on the direction of Indofood Sukses i.e., Indofood Sukses and WH Group go up and down completely randomly.
Pair Corralation between Indofood Sukses and WH Group
Assuming the 90 days horizon Indofood Sukses Makmur is expected to under-perform the WH Group. But the pink sheet apears to be less risky and, when comparing its historical volatility, Indofood Sukses Makmur is 1.03 times less risky than WH Group. The pink sheet trades about -0.19 of its potential returns per unit of risk. The WH Group Ltd is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 1,322 in WH Group Ltd on January 19, 2024 and sell it today you would earn a total of 66.00 from holding WH Group Ltd or generate 4.99% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Indofood Sukses Makmur vs. WH Group Ltd
Performance |
| Timeline |
| Indofood Sukses Makmur |
| WH Group |
Indofood Sukses and WH Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Indofood Sukses and WH Group
The main advantage of trading using opposite Indofood Sukses and WH Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Indofood Sukses position performs unexpectedly, WH Group 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 WH Group will offset losses from the drop in WH Group's long position.| Indofood Sukses vs. Kellanova | Indofood Sukses vs. Lancaster Colony | Indofood Sukses vs. The A2 Milk | Indofood Sukses vs. Altavoz Entertainment |
| WH Group vs. Kellanova | WH Group vs. Lancaster Colony | WH Group vs. The A2 Milk | WH Group vs. Altavoz Entertainment |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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