Correlation Between Westgold Resources and INDOFOOD AGRI
Can any of the company-specific risk be diversified away by investing in both Westgold Resources and INDOFOOD AGRI 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 Westgold Resources and INDOFOOD AGRI into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Westgold Resources and INDOFOOD AGRI RES, you can compare the effects of market volatilities on Westgold Resources and INDOFOOD AGRI 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 Westgold Resources with a short position of INDOFOOD AGRI. Check out your portfolio center. Please also check ongoing floating volatility patterns of Westgold Resources and INDOFOOD AGRI.
Diversification Opportunities for Westgold Resources and INDOFOOD AGRI
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Westgold and INDOFOOD is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Westgold Resources and INDOFOOD AGRI RES in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on INDOFOOD AGRI RES and Westgold Resources 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 Westgold Resources are associated (or correlated) with INDOFOOD AGRI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of INDOFOOD AGRI RES has no effect on the direction of Westgold Resources i.e., Westgold Resources and INDOFOOD AGRI go up and down completely randomly.
Pair Corralation between Westgold Resources and INDOFOOD AGRI
Assuming the 90 days horizon Westgold Resources is expected to generate 1.73 times more return on investment than INDOFOOD AGRI. However, Westgold Resources is 1.73 times more volatile than INDOFOOD AGRI RES. It trades about 0.06 of its potential returns per unit of risk. INDOFOOD AGRI RES is currently generating about 0.02 per unit of risk. If you would invest 74.00 in Westgold Resources on October 11, 2024 and sell it today you would earn a total of 100.00 from holding Westgold Resources or generate 135.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Westgold Resources vs. INDOFOOD AGRI RES
Performance |
| Timeline |
| Westgold Resources |
| INDOFOOD AGRI RES |
Westgold Resources and INDOFOOD AGRI Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Westgold Resources and INDOFOOD AGRI
The main advantage of trading using opposite Westgold Resources and INDOFOOD AGRI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Westgold Resources position performs unexpectedly, INDOFOOD AGRI 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 INDOFOOD AGRI will offset losses from the drop in INDOFOOD AGRI's long position.| Westgold Resources vs. INDOFOOD AGRI RES | Westgold Resources vs. Austevoll Seafood ASA | Westgold Resources vs. Hua Hong Semiconductor | Westgold Resources vs. Nordic Semiconductor ASA |
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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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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