Correlation Between PT Indofood and Alternative Investment

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

Diversification Opportunities for PT Indofood and Alternative Investment

0.0

Correlation Coefficient

PT Indofood  Alternative Investment

Pay attention - limited upside

The 3 months correlation between PIFMF and Alternative is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding PT Indofood Sukses and Alternative Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alternative Investment 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 Alternative Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alternative Investment has no effect on the direction of PT Indofood i.e., PT Indofood and Alternative Investment go up and down completely randomly.

Pair Corralation between PT Indofood and Alternative Investment

If you would invest  0.01  in Alternative Investment on January 26, 2024 and sell it today you would earn a total of  0.00  from holding Alternative Investment or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

PT Indofood Sukses  vs.  Alternative Investment

PT Indofood Sukses

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in PT Indofood Sukses are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite nearly conflicting primary indicators, PT Indofood may actually be approaching a critical reversion point that can send shares even higher in May 2024.

Alternative Investment

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Alternative Investment has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy forward-looking signals, Alternative Investment is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with PT Indofood and Alternative Investment

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

The idea behind PT Indofood Sukses and Alternative Investment 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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.