Correlation Between PT Indofood and Gulf Coast

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

Diversification Opportunities for PT Indofood and Gulf Coast

-0.78

Correlation Coefficient

PT Indofood  Gulf Coast

Pay attention - limited upside

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

Pair Corralation between PT Indofood and Gulf Coast

If you would invest  2.00  in Gulf Coast on September 26, 2024 and sell it today you would earn a total of  0.90  from holding Gulf Coast or generate 45.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	4.76%
Values	Daily Returns

PT Indofood Sukses  vs.  Gulf Coast

PT Indofood Sukses

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PT Indofood Sukses has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable primary indicators, PT Indofood is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Gulf Coast

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Gulf Coast are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, Gulf Coast unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with PT Indofood and Gulf Coast

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

The idea behind PT Indofood Sukses and Gulf Coast 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.