Correlation Between FKS Food and Inocycle Technology

Can any of the company-specific risk be diversified away by investing in both FKS Food and Inocycle Technology 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 FKS Food and Inocycle Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between FKS Food Sejahtera and Inocycle Technology Tbk, you can compare the effects of market volatilities on FKS Food and Inocycle Technology 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 FKS Food with a short position of Inocycle Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of FKS Food and Inocycle Technology.

Diversification Opportunities for FKS Food and Inocycle Technology

-0.06

Correlation Coefficient

FKS Food  Inocycle Technology

Good diversification

The 3 months correlation between FKS and Inocycle is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding FKS Food Sejahtera and Inocycle Technology Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Inocycle Technology Tbk and FKS Food 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 FKS Food Sejahtera are associated (or correlated) with Inocycle Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Inocycle Technology Tbk has no effect on the direction of FKS Food i.e., FKS Food and Inocycle Technology go up and down completely randomly.

Pair Corralation between FKS Food and Inocycle Technology

Assuming the 90 days trading horizon FKS Food Sejahtera is expected to generate 1.46 times more return on investment than Inocycle Technology. However, FKS Food is 1.46 times more volatile than Inocycle Technology Tbk. It trades about 0.19 of its potential returns per unit of risk. Inocycle Technology Tbk is currently generating about -0.06 per unit of risk. If you would invest  10,800  in FKS Food Sejahtera on April 25, 2025 and sell it today you would earn a total of  4,000  from holding FKS Food Sejahtera or generate 37.04% return on investment over 90 days.

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

FKS Food Sejahtera  vs.  Inocycle Technology Tbk

FKS Food Sejahtera

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in FKS Food Sejahtera are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, FKS Food disclosed solid returns over the last few months and may actually be approaching a breakup point.

Inocycle Technology Tbk

Risk-Adjusted Performance

Very Weak

Over the last 90 days Inocycle Technology Tbk has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's forward-looking signals remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Pair Trading with FKS Food and Inocycle Technology

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

The idea behind FKS Food Sejahtera and Inocycle Technology Tbk 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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.