Correlation Between CHINA EDUCATION and INDOFOOD AGRI
Can any of the company-specific risk be diversified away by investing in both CHINA EDUCATION 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 CHINA EDUCATION and INDOFOOD AGRI into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CHINA EDUCATION GROUP and INDOFOOD AGRI RES, you can compare the effects of market volatilities on CHINA EDUCATION 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 CHINA EDUCATION with a short position of INDOFOOD AGRI. Check out your portfolio center. Please also check ongoing floating volatility patterns of CHINA EDUCATION and INDOFOOD AGRI.
Diversification Opportunities for CHINA EDUCATION and INDOFOOD AGRI
-0.09 | Correlation Coefficient |
Good diversification
The 3 months correlation between CHINA and INDOFOOD is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding CHINA EDUCATION GROUP 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 CHINA EDUCATION 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 CHINA EDUCATION GROUP 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 CHINA EDUCATION i.e., CHINA EDUCATION and INDOFOOD AGRI go up and down completely randomly.
Pair Corralation between CHINA EDUCATION and INDOFOOD AGRI
Assuming the 90 days horizon CHINA EDUCATION GROUP is expected to generate 2.11 times more return on investment than INDOFOOD AGRI. However, CHINA EDUCATION is 2.11 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 34.00 in CHINA EDUCATION GROUP on September 4, 2024 and sell it today you would earn a total of 7.00 from holding CHINA EDUCATION GROUP or generate 20.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.66% |
| Values | Daily Returns |
CHINA EDUCATION GROUP vs. INDOFOOD AGRI RES
Performance |
| Timeline |
| CHINA EDUCATION GROUP |
| INDOFOOD AGRI RES |
CHINA EDUCATION and INDOFOOD AGRI Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CHINA EDUCATION and INDOFOOD AGRI
The main advantage of trading using opposite CHINA EDUCATION and INDOFOOD AGRI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CHINA EDUCATION 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.| CHINA EDUCATION vs. Apple Inc | CHINA EDUCATION vs. Apple Inc | CHINA EDUCATION vs. Apple Inc | CHINA EDUCATION vs. Apple Inc |
| INDOFOOD AGRI vs. NEWELL RUBBERMAID | INDOFOOD AGRI vs. PENN NATL GAMING | INDOFOOD AGRI vs. Mitsubishi Materials | INDOFOOD AGRI vs. Penn National Gaming |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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