Correlation Between PT Indofood and Hanjaya Mandala

Can any of the company-specific risk be diversified away by investing in both PT Indofood and Hanjaya Mandala 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 PT Indofood and Hanjaya Mandala into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between PT Indofood Sukses and Hanjaya Mandala Sampoerna, you can compare the effects of market volatilities on PT Indofood and Hanjaya Mandala 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 PT Indofood with a short position of Hanjaya Mandala. Check out your portfolio center. Please also check ongoing floating volatility patterns of PT Indofood and Hanjaya Mandala.

Diversification Opportunities for PT Indofood and Hanjaya Mandala

-0.78

Correlation Coefficient

PT Indofood  Hanjaya Mandala

Pay attention - limited upside

The 3 months correlation between INDF and Hanjaya is -0.78. Overlapping area represents the amount of risk that can be diversified away by holding PT Indofood Sukses and Hanjaya Mandala Sampoerna in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hanjaya Mandala Sampoerna and PT Indofood 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 PT Indofood Sukses are associated (or correlated) with Hanjaya Mandala. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hanjaya Mandala Sampoerna has no effect on the direction of PT Indofood i.e., PT Indofood and Hanjaya Mandala go up and down completely randomly.

Pair Corralation between PT Indofood and Hanjaya Mandala

Assuming the 90 days trading horizon PT Indofood Sukses is expected to generate 0.68 times more return on investment than Hanjaya Mandala. However, PT Indofood Sukses is 1.47 times less risky than Hanjaya Mandala. It trades about 0.15 of its potential returns per unit of risk. Hanjaya Mandala Sampoerna is currently generating about -0.08 per unit of risk. If you would invest  710,000  in PT Indofood Sukses on September 15, 2024 and sell it today you would earn a total of  102,500  from holding PT Indofood Sukses or generate 14.44% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

PT Indofood Sukses  vs.  Hanjaya Mandala Sampoerna

PT Indofood Sukses

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in PT Indofood Sukses are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, PT Indofood disclosed solid returns over the last few months and may actually be approaching a breakup point.

Hanjaya Mandala Sampoerna

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hanjaya Mandala Sampoerna has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's forward-looking signals remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Pair Trading with PT Indofood and Hanjaya Mandala

The main advantage of trading using opposite PT Indofood and Hanjaya Mandala positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PT Indofood position performs unexpectedly, Hanjaya Mandala 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 Hanjaya Mandala will offset losses from the drop in Hanjaya Mandala's long position.

The idea behind PT Indofood Sukses and Hanjaya Mandala Sampoerna 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.