Correlation Between SYSTEMAIR and INDOFOOD AGRI
Can any of the company-specific risk be diversified away by investing in both SYSTEMAIR 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 SYSTEMAIR and INDOFOOD AGRI into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SYSTEMAIR AB and INDOFOOD AGRI RES, you can compare the effects of market volatilities on SYSTEMAIR 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 SYSTEMAIR with a short position of INDOFOOD AGRI. Check out your portfolio center. Please also check ongoing floating volatility patterns of SYSTEMAIR and INDOFOOD AGRI.
Diversification Opportunities for SYSTEMAIR and INDOFOOD AGRI
0.22 | Correlation Coefficient |
Modest diversification
The 3 months correlation between SYSTEMAIR and INDOFOOD is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding SYSTEMAIR AB 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 SYSTEMAIR 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 SYSTEMAIR AB 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 SYSTEMAIR i.e., SYSTEMAIR and INDOFOOD AGRI go up and down completely randomly.
Pair Corralation between SYSTEMAIR and INDOFOOD AGRI
Assuming the 90 days trading horizon SYSTEMAIR AB is expected to under-perform the INDOFOOD AGRI. But the stock apears to be less risky and, when comparing its historical volatility, SYSTEMAIR AB is 1.11 times less risky than INDOFOOD AGRI. The stock trades about -0.17 of its potential returns per unit of risk. The INDOFOOD AGRI RES is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 22.00 in INDOFOOD AGRI RES on October 11, 2024 and sell it today you would earn a total of 0.00 from holding INDOFOOD AGRI RES or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
SYSTEMAIR AB vs. INDOFOOD AGRI RES
Performance |
| Timeline |
| SYSTEMAIR AB |
| INDOFOOD AGRI RES |
SYSTEMAIR and INDOFOOD AGRI Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SYSTEMAIR and INDOFOOD AGRI
The main advantage of trading using opposite SYSTEMAIR and INDOFOOD AGRI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SYSTEMAIR 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.| SYSTEMAIR vs. Air Transport Services | SYSTEMAIR vs. GOLD ROAD RES | SYSTEMAIR vs. KINGBOARD CHEMICAL | SYSTEMAIR vs. AIR PRODCHEMICALS |
| INDOFOOD AGRI vs. PACIFIC ONLINE | INDOFOOD AGRI vs. BJs Restaurants | INDOFOOD AGRI vs. SYSTEMAIR AB | INDOFOOD AGRI vs. ETFS Coffee ETC |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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