Correlation Between Tate Lyle and Indofood Sukses
Can any of the company-specific risk be diversified away by investing in both Tate Lyle and Indofood Sukses 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 Tate Lyle and Indofood Sukses into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tate Lyle PLC and Indofood Sukses Makmur, you can compare the effects of market volatilities on Tate Lyle and Indofood Sukses 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 Tate Lyle with a short position of Indofood Sukses. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tate Lyle and Indofood Sukses.
Diversification Opportunities for Tate Lyle and Indofood Sukses
-0.02 | Correlation Coefficient |
Good diversification
The 3 months correlation between Tate and Indofood is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Tate Lyle PLC and Indofood Sukses Makmur in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Indofood Sukses Makmur and Tate Lyle 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 Tate Lyle PLC are associated (or correlated) with Indofood Sukses. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Indofood Sukses Makmur has no effect on the direction of Tate Lyle i.e., Tate Lyle and Indofood Sukses go up and down completely randomly.
Pair Corralation between Tate Lyle and Indofood Sukses
Assuming the 90 days horizon Tate Lyle PLC is expected to generate 0.88 times more return on investment than Indofood Sukses. However, Tate Lyle PLC is 1.14 times less risky than Indofood Sukses. It trades about 0.02 of its potential returns per unit of risk. Indofood Sukses Makmur is currently generating about -0.19 per unit of risk. If you would invest 3,080 in Tate Lyle PLC on January 21, 2024 and sell it today you would earn a total of 13.00 from holding Tate Lyle PLC or generate 0.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Tate Lyle PLC vs. Indofood Sukses Makmur
Performance |
| Timeline |
| Tate Lyle PLC |
| Indofood Sukses Makmur |
Tate Lyle and Indofood Sukses Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tate Lyle and Indofood Sukses
The main advantage of trading using opposite Tate Lyle and Indofood Sukses positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tate Lyle position performs unexpectedly, Indofood Sukses 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 Indofood Sukses will offset losses from the drop in Indofood Sukses' long position.| Tate Lyle vs. Mannatech Incorporated | Tate Lyle vs. Edgewell Personal Care | Tate Lyle vs. Inter Parfums | Tate Lyle vs. Nu Skin Enterprises |
| 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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