Correlation Between Algonquin Power and INDOFOOD AGRI
Can any of the company-specific risk be diversified away by investing in both Algonquin Power 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 Algonquin Power and INDOFOOD AGRI into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Algonquin Power Utilities and INDOFOOD AGRI RES, you can compare the effects of market volatilities on Algonquin Power 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 Algonquin Power with a short position of INDOFOOD AGRI. Check out your portfolio center. Please also check ongoing floating volatility patterns of Algonquin Power and INDOFOOD AGRI.
Diversification Opportunities for Algonquin Power and INDOFOOD AGRI
-0.66 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Algonquin and INDOFOOD is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Algonquin Power Utilities 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 Algonquin Power 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 Algonquin Power Utilities 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 Algonquin Power i.e., Algonquin Power and INDOFOOD AGRI go up and down completely randomly.
Pair Corralation between Algonquin Power and INDOFOOD AGRI
Assuming the 90 days horizon Algonquin Power Utilities is expected to under-perform the INDOFOOD AGRI. But the stock apears to be less risky and, when comparing its historical volatility, Algonquin Power Utilities is 1.35 times less risky than INDOFOOD AGRI. The stock trades about -0.02 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 21.00 in INDOFOOD AGRI RES on December 10, 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 Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Algonquin Power Utilities vs. INDOFOOD AGRI RES
Performance |
| Timeline |
| Algonquin Power Utilities |
| INDOFOOD AGRI RES |
Algonquin Power and INDOFOOD AGRI Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Algonquin Power and INDOFOOD AGRI
The main advantage of trading using opposite Algonquin Power and INDOFOOD AGRI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Algonquin Power 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.| Algonquin Power vs. EMPEROR ENT HOTEL | Algonquin Power vs. NIGHTINGALE HEALTH EO | Algonquin Power vs. HEALTHSTREAM | Algonquin Power vs. EPSILON HEALTHCARE LTD |
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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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