Correlation Between PT Indofood and ADRIATIC METALS

Can any of the company-specific risk be diversified away by investing in both PT Indofood and ADRIATIC METALS 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 ADRIATIC METALS 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 ADRIATIC METALS LS 013355, you can compare the effects of market volatilities on PT Indofood and ADRIATIC METALS 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 ADRIATIC METALS. Check out your portfolio center. Please also check ongoing floating volatility patterns of PT Indofood and ADRIATIC METALS.

Diversification Opportunities for PT Indofood and ADRIATIC METALS

0.63

Correlation Coefficient

PT Indofood  ADRIATIC METALS

Poor diversification

The 3 months correlation between ISM and ADRIATIC is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding PT Indofood Sukses and ADRIATIC METALS LS 013355 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ADRIATIC METALS LS 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 ADRIATIC METALS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ADRIATIC METALS LS has no effect on the direction of PT Indofood i.e., PT Indofood and ADRIATIC METALS go up and down completely randomly.

Pair Corralation between PT Indofood and ADRIATIC METALS

Assuming the 90 days horizon PT Indofood is expected to generate 1.34 times less return on investment than ADRIATIC METALS. In addition to that, PT Indofood is 1.01 times more volatile than ADRIATIC METALS LS 013355. It trades about 0.08 of its total potential returns per unit of risk. ADRIATIC METALS LS 013355 is currently generating about 0.11 per unit of volatility. If you would invest  197.00  in ADRIATIC METALS LS 013355 on September 20, 2024 and sell it today you would earn a total of  43.00  from holding ADRIATIC METALS LS 013355 or generate 21.83% return on investment over 90 days.

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

PT Indofood Sukses  vs.  ADRIATIC METALS LS 013355

PT Indofood Sukses

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in PT Indofood Sukses are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, PT Indofood reported solid returns over the last few months and may actually be approaching a breakup point.

ADRIATIC METALS LS

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in ADRIATIC METALS LS 013355 are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, ADRIATIC METALS reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with PT Indofood and ADRIATIC METALS

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

The idea behind PT Indofood Sukses and ADRIATIC METALS LS 013355 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.