Correlation Between Gladstone Investment and INDOFOOD AGRI
Can any of the company-specific risk be diversified away by investing in both Gladstone Investment 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 Gladstone Investment and INDOFOOD AGRI into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Gladstone Investment and INDOFOOD AGRI RES, you can compare the effects of market volatilities on Gladstone Investment 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 Gladstone Investment with a short position of INDOFOOD AGRI. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gladstone Investment and INDOFOOD AGRI.
Diversification Opportunities for Gladstone Investment and INDOFOOD AGRI
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Gladstone and INDOFOOD is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Gladstone Investment 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 Gladstone Investment 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 Gladstone Investment 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 Gladstone Investment i.e., Gladstone Investment and INDOFOOD AGRI go up and down completely randomly.
Pair Corralation between Gladstone Investment and INDOFOOD AGRI
Assuming the 90 days horizon Gladstone Investment is expected to generate 1.47 times less return on investment than INDOFOOD AGRI. But when comparing it to its historical volatility, Gladstone Investment is 1.09 times less risky than INDOFOOD AGRI. It trades about 0.05 of its potential returns per unit of risk. INDOFOOD AGRI RES is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 19.00 in INDOFOOD AGRI RES on September 1, 2024 and sell it today you would earn a total of 3.00 from holding INDOFOOD AGRI RES or generate 15.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Gladstone Investment vs. INDOFOOD AGRI RES
Performance |
| Timeline |
| Gladstone Investment |
| INDOFOOD AGRI RES |
Gladstone Investment and INDOFOOD AGRI Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gladstone Investment and INDOFOOD AGRI
The main advantage of trading using opposite Gladstone Investment and INDOFOOD AGRI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gladstone Investment 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.| Gladstone Investment vs. MINCO SILVER | Gladstone Investment vs. Perdoceo Education | Gladstone Investment vs. Grand Canyon Education | Gladstone Investment vs. RYU Apparel |
| INDOFOOD AGRI vs. Playtech plc | INDOFOOD AGRI vs. GungHo Online Entertainment | INDOFOOD AGRI vs. TAL Education Group | INDOFOOD AGRI vs. CarsalesCom |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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