Correlation Between PT Indofood and Wise Plc

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

Diversification Opportunities for PT Indofood and Wise Plc

-0.83

Correlation Coefficient

PT Indofood  Wise Plc

Pay attention - limited upside

The 3 months correlation between PIFMF and Wise is -0.83. Overlapping area represents the amount of risk that can be diversified away by holding PT Indofood Sukses and Wise plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wise plc 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 Wise Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wise plc has no effect on the direction of PT Indofood i.e., PT Indofood and Wise Plc go up and down completely randomly.

Pair Corralation between PT Indofood and Wise Plc

If you would invest  882.00  in Wise plc on October 1, 2024 and sell it today you would earn a total of  436.00  from holding Wise plc or generate 49.43% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	1.59%
Values	Daily Returns

PT Indofood Sukses  vs.  Wise plc

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.

Wise plc

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Wise plc are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak fundamental indicators, Wise Plc reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with PT Indofood and Wise Plc

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

The idea behind PT Indofood Sukses and Wise plc 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.

Check out your portfolio center.

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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.