Correlation Between Indofood Sukses and Akasha Wira
Can any of the company-specific risk be diversified away by investing in both Indofood Sukses and Akasha Wira 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 Akasha Wira 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 Akasha Wira International, you can compare the effects of market volatilities on Indofood Sukses and Akasha Wira 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 Akasha Wira. Check out your portfolio center. Please also check ongoing floating volatility patterns of Indofood Sukses and Akasha Wira.
Diversification Opportunities for Indofood Sukses and Akasha Wira
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Indofood and Akasha is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Indofood Sukses Makmur and Akasha Wira International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Akasha Wira International 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 Akasha Wira. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Akasha Wira International has no effect on the direction of Indofood Sukses i.e., Indofood Sukses and Akasha Wira go up and down completely randomly.
Pair Corralation between Indofood Sukses and Akasha Wira
Assuming the 90 days trading horizon Indofood Sukses Makmur is expected to under-perform the Akasha Wira. But the stock apears to be less risky and, when comparing its historical volatility, Indofood Sukses Makmur is 1.43 times less risky than Akasha Wira. The stock trades about -0.06 of its potential returns per unit of risk. The Akasha Wira International is currently generating about 0.26 of returns per unit of risk over similar time horizon. If you would invest 940,000 in Akasha Wira International on February 1, 2024 and sell it today you would earn a total of 117,500 from holding Akasha Wira International or generate 12.5% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Indofood Sukses Makmur vs. Akasha Wira International
Performance |
Timeline |
Indofood Sukses Makmur |
Akasha Wira International |
Indofood Sukses and Akasha Wira Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Indofood Sukses and Akasha Wira
The main advantage of trading using opposite Indofood Sukses and Akasha Wira positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Indofood Sukses position performs unexpectedly, Akasha Wira 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 Akasha Wira will offset losses from the drop in Akasha Wira's long position.Indofood Sukses vs. Astra International Tbk | Indofood Sukses vs. Unilever Indonesia Tbk | Indofood Sukses vs. Telkom Indonesia Tbk | Indofood Sukses vs. Bank Mandiri Persero |
Akasha Wira vs. FKS Food Sejahtera | Akasha Wira vs. Wilmar Cahaya Indonesia | Akasha Wira vs. Polychem Indonesia Tbk | Akasha Wira vs. Astra Graphia Tbk |
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 Stocks Directory module to find actively traded stocks across global markets.
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