Correlation Between AIR LIQUIDE and INDOFOOD AGRI
Can any of the company-specific risk be diversified away by investing in both AIR LIQUIDE 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 AIR LIQUIDE and INDOFOOD AGRI into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AIR LIQUIDE ADR and INDOFOOD AGRI RES, you can compare the effects of market volatilities on AIR LIQUIDE 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 AIR LIQUIDE with a short position of INDOFOOD AGRI. Check out your portfolio center. Please also check ongoing floating volatility patterns of AIR LIQUIDE and INDOFOOD AGRI.
Diversification Opportunities for AIR LIQUIDE and INDOFOOD AGRI
-0.2 | Correlation Coefficient |
Good diversification
The 3 months correlation between AIR and INDOFOOD is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding AIR LIQUIDE ADR 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 AIR LIQUIDE 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 AIR LIQUIDE ADR 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 AIR LIQUIDE i.e., AIR LIQUIDE and INDOFOOD AGRI go up and down completely randomly.
Pair Corralation between AIR LIQUIDE and INDOFOOD AGRI
Assuming the 90 days trading horizon AIR LIQUIDE ADR is expected to under-perform the INDOFOOD AGRI. But the stock apears to be less risky and, when comparing its historical volatility, AIR LIQUIDE ADR is 2.97 times less risky than INDOFOOD AGRI. The stock trades about -0.29 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 August 25, 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 | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
AIR LIQUIDE ADR vs. INDOFOOD AGRI RES
Performance |
| Timeline |
| AIR LIQUIDE ADR |
| INDOFOOD AGRI RES |
AIR LIQUIDE and INDOFOOD AGRI Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AIR LIQUIDE and INDOFOOD AGRI
The main advantage of trading using opposite AIR LIQUIDE and INDOFOOD AGRI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AIR LIQUIDE 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.| AIR LIQUIDE vs. Sociedad Qumica y | AIR LIQUIDE vs. Superior Plus Corp | AIR LIQUIDE vs. NMI Holdings | AIR LIQUIDE vs. Origin Agritech |
| INDOFOOD AGRI vs. SBA Communications Corp | INDOFOOD AGRI vs. SK TELECOM TDADR | INDOFOOD AGRI vs. Singapore Telecommunications Limited | INDOFOOD AGRI vs. Shenandoah Telecommunications |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
Other Complementary Tools
| Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon | |
| Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas | |
| ETFs Find actively traded Exchange Traded Funds (ETF) from around the world | |
| Top Crypto Exchanges Search and analyze digital assets across top global cryptocurrency exchanges | |
| Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing |