Correlation Between CAIRN HOMES and INDOFOOD AGRI
Can any of the company-specific risk be diversified away by investing in both CAIRN HOMES 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 CAIRN HOMES and INDOFOOD AGRI into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CAIRN HOMES EO and INDOFOOD AGRI RES, you can compare the effects of market volatilities on CAIRN HOMES 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 CAIRN HOMES with a short position of INDOFOOD AGRI. Check out your portfolio center. Please also check ongoing floating volatility patterns of CAIRN HOMES and INDOFOOD AGRI.
Diversification Opportunities for CAIRN HOMES and INDOFOOD AGRI
-0.01 | Correlation Coefficient |
Good diversification
The 3 months correlation between CAIRN and INDOFOOD is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding CAIRN HOMES EO 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 CAIRN HOMES 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 CAIRN HOMES EO 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 CAIRN HOMES i.e., CAIRN HOMES and INDOFOOD AGRI go up and down completely randomly.
Pair Corralation between CAIRN HOMES and INDOFOOD AGRI
Assuming the 90 days horizon CAIRN HOMES EO is expected to generate 0.97 times more return on investment than INDOFOOD AGRI. However, CAIRN HOMES EO is 1.03 times less risky than INDOFOOD AGRI. It trades about -0.07 of its potential returns per unit of risk. INDOFOOD AGRI RES is currently generating about -0.08 per unit of risk. If you would invest 227.00 in CAIRN HOMES EO on November 7, 2024 and sell it today you would lose (8.00) from holding CAIRN HOMES EO or give up 3.52% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
CAIRN HOMES EO vs. INDOFOOD AGRI RES
Performance |
| Timeline |
| CAIRN HOMES EO |
| INDOFOOD AGRI RES |
CAIRN HOMES and INDOFOOD AGRI Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CAIRN HOMES and INDOFOOD AGRI
The main advantage of trading using opposite CAIRN HOMES and INDOFOOD AGRI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CAIRN HOMES 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.| CAIRN HOMES vs. THAI BEVERAGE | CAIRN HOMES vs. Nomad Foods | CAIRN HOMES vs. MOLSON RS BEVERAGE | CAIRN HOMES vs. Monster Beverage Corp |
| INDOFOOD AGRI vs. BW OFFSHORE LTD | INDOFOOD AGRI vs. Eidesvik Offshore ASA | INDOFOOD AGRI vs. Adtalem Global Education | INDOFOOD AGRI vs. Perdoceo Education |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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