Correlation Between PT Indofood and Teradata Corp

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

Diversification Opportunities for PT Indofood and Teradata Corp

0.56

Correlation Coefficient

PT Indofood  Teradata Corp

Very weak diversification

The 3 months correlation between ISM and Teradata is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding PT Indofood Sukses and Teradata Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Teradata Corp 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 Teradata Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Teradata Corp has no effect on the direction of PT Indofood i.e., PT Indofood and Teradata Corp go up and down completely randomly.

Pair Corralation between PT Indofood and Teradata Corp

Assuming the 90 days horizon PT Indofood is expected to generate 1.61 times less return on investment than Teradata Corp. In addition to that, PT Indofood is 2.02 times more volatile than Teradata Corp. It trades about 0.05 of its total potential returns per unit of risk. Teradata Corp is currently generating about 0.16 per unit of volatility. If you would invest  2,620  in Teradata Corp on September 24, 2024 and sell it today you would earn a total of  460.00  from holding Teradata Corp or generate 17.56% return on investment over 90 days.

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

PT Indofood Sukses  vs.  Teradata Corp

PT Indofood Sukses

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in PT Indofood Sukses are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, PT Indofood may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Teradata Corp

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Teradata Corp are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Teradata Corp reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with PT Indofood and Teradata Corp

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

The idea behind PT Indofood Sukses and Teradata Corp 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.