Correlation Between PKSHA TECHNOLOGY and INDOFOOD AGRI
Can any of the company-specific risk be diversified away by investing in both PKSHA TECHNOLOGY 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 PKSHA TECHNOLOGY and INDOFOOD AGRI into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PKSHA TECHNOLOGY INC and INDOFOOD AGRI RES, you can compare the effects of market volatilities on PKSHA TECHNOLOGY 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 PKSHA TECHNOLOGY with a short position of INDOFOOD AGRI. Check out your portfolio center. Please also check ongoing floating volatility patterns of PKSHA TECHNOLOGY and INDOFOOD AGRI.
Diversification Opportunities for PKSHA TECHNOLOGY and INDOFOOD AGRI
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between PKSHA and INDOFOOD is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding PKSHA TECHNOLOGY INC 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 PKSHA TECHNOLOGY 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 PKSHA TECHNOLOGY INC 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 PKSHA TECHNOLOGY i.e., PKSHA TECHNOLOGY and INDOFOOD AGRI go up and down completely randomly.
Pair Corralation between PKSHA TECHNOLOGY and INDOFOOD AGRI
Assuming the 90 days horizon PKSHA TECHNOLOGY INC is expected to generate 1.72 times more return on investment than INDOFOOD AGRI. However, PKSHA TECHNOLOGY is 1.72 times more volatile than INDOFOOD AGRI RES. It trades about 0.04 of its potential returns per unit of risk. INDOFOOD AGRI RES is currently generating about 0.03 per unit of risk. If you would invest 1,780 in PKSHA TECHNOLOGY INC on September 1, 2024 and sell it today you would earn a total of 660.00 from holding PKSHA TECHNOLOGY INC or generate 37.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
PKSHA TECHNOLOGY INC vs. INDOFOOD AGRI RES
Performance |
| Timeline |
| PKSHA TECHNOLOGY INC |
| INDOFOOD AGRI RES |
PKSHA TECHNOLOGY and INDOFOOD AGRI Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PKSHA TECHNOLOGY and INDOFOOD AGRI
The main advantage of trading using opposite PKSHA TECHNOLOGY and INDOFOOD AGRI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PKSHA TECHNOLOGY 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.| PKSHA TECHNOLOGY vs. Liberty Broadband | PKSHA TECHNOLOGY vs. COMPUTERSHARE | PKSHA TECHNOLOGY vs. Internet Thailand PCL | PKSHA TECHNOLOGY vs. Cars Inc |
| 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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