Correlation Between Haier Smart and INDOFOOD AGRI
Can any of the company-specific risk be diversified away by investing in both Haier Smart 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 Haier Smart and INDOFOOD AGRI into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Haier Smart Home and INDOFOOD AGRI RES, you can compare the effects of market volatilities on Haier Smart 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 Haier Smart with a short position of INDOFOOD AGRI. Check out your portfolio center. Please also check ongoing floating volatility patterns of Haier Smart and INDOFOOD AGRI.
Diversification Opportunities for Haier Smart and INDOFOOD AGRI
-0.04 | Correlation Coefficient |
Good diversification
The 3 months correlation between Haier and INDOFOOD is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Haier Smart Home 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 Haier Smart 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 Haier Smart Home 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 Haier Smart i.e., Haier Smart and INDOFOOD AGRI go up and down completely randomly.
Pair Corralation between Haier Smart and INDOFOOD AGRI
Assuming the 90 days trading horizon Haier Smart is expected to generate 25.21 times less return on investment than INDOFOOD AGRI. But when comparing it to its historical volatility, Haier Smart Home is 1.62 times less risky than INDOFOOD AGRI. It trades about 0.01 of its potential returns per unit of risk. INDOFOOD AGRI RES is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 21.00 in INDOFOOD AGRI RES on November 1, 2024 and sell it today you would earn a total of 1.00 from holding INDOFOOD AGRI RES or generate 4.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Haier Smart Home vs. INDOFOOD AGRI RES
Performance |
| Timeline |
| Haier Smart Home |
| INDOFOOD AGRI RES |
Haier Smart and INDOFOOD AGRI Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Haier Smart and INDOFOOD AGRI
The main advantage of trading using opposite Haier Smart and INDOFOOD AGRI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Haier Smart 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.| Haier Smart vs. ARROW ELECTRONICS | Haier Smart vs. AOI Electronics Co | Haier Smart vs. STMicroelectronics NV | Haier Smart vs. United Breweries Co |
| INDOFOOD AGRI vs. Hitachi Construction Machinery | INDOFOOD AGRI vs. NURAN WIRELESS INC | INDOFOOD AGRI vs. RYU Apparel | INDOFOOD AGRI vs. CENTURIA OFFICE REIT |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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