Correlation Between PT Indofood and Inti Bangun

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

Diversification Opportunities for PT Indofood and Inti Bangun

-0.43

Correlation Coefficient

PT Indofood  Inti Bangun

Very good diversification

The 3 months correlation between INDF and Inti is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding PT Indofood Sukses and Inti Bangun Sejahtera in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Inti Bangun Sejahtera 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 Inti Bangun. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Inti Bangun Sejahtera has no effect on the direction of PT Indofood i.e., PT Indofood and Inti Bangun go up and down completely randomly.

Pair Corralation between PT Indofood and Inti Bangun

Assuming the 90 days trading horizon PT Indofood Sukses is expected to generate 0.6 times more return on investment than Inti Bangun. However, PT Indofood Sukses is 1.67 times less risky than Inti Bangun. It trades about 0.18 of its potential returns per unit of risk. Inti Bangun Sejahtera is currently generating about 0.01 per unit of risk. If you would invest  772,500  in PT Indofood Sukses on September 16, 2024 and sell it today you would earn a total of  40,000  from holding PT Indofood Sukses or generate 5.18% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	95.24%
Values	Daily Returns

PT Indofood Sukses  vs.  Inti Bangun Sejahtera

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.

Inti Bangun Sejahtera

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Inti Bangun Sejahtera 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 Inti Bangun

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

The idea behind PT Indofood Sukses and Inti Bangun Sejahtera 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.