Correlation Between COLUMBIA SPORTSWEAR and Indorama Ventures
Can any of the company-specific risk be diversified away by investing in both COLUMBIA SPORTSWEAR and Indorama Ventures 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 COLUMBIA SPORTSWEAR and Indorama Ventures into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between COLUMBIA SPORTSWEAR and Indorama Ventures PCL, you can compare the effects of market volatilities on COLUMBIA SPORTSWEAR and Indorama Ventures 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 COLUMBIA SPORTSWEAR with a short position of Indorama Ventures. Check out your portfolio center. Please also check ongoing floating volatility patterns of COLUMBIA SPORTSWEAR and Indorama Ventures.
Diversification Opportunities for COLUMBIA SPORTSWEAR and Indorama Ventures
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between COLUMBIA and Indorama is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding COLUMBIA SPORTSWEAR and Indorama Ventures PCL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Indorama Ventures PCL and COLUMBIA SPORTSWEAR 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 COLUMBIA SPORTSWEAR are associated (or correlated) with Indorama Ventures. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Indorama Ventures PCL has no effect on the direction of COLUMBIA SPORTSWEAR i.e., COLUMBIA SPORTSWEAR and Indorama Ventures go up and down completely randomly.
Pair Corralation between COLUMBIA SPORTSWEAR and Indorama Ventures
Assuming the 90 days trading horizon COLUMBIA SPORTSWEAR is expected to generate 3.51 times less return on investment than Indorama Ventures. But when comparing it to its historical volatility, COLUMBIA SPORTSWEAR is 4.14 times less risky than Indorama Ventures. It trades about 0.27 of its potential returns per unit of risk. Indorama Ventures PCL is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest 51.00 in Indorama Ventures PCL on September 12, 2024 and sell it today you would earn a total of 19.00 from holding Indorama Ventures PCL or generate 37.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.65% |
| Values | Daily Returns |
COLUMBIA SPORTSWEAR vs. Indorama Ventures PCL
Performance |
| Timeline |
| COLUMBIA SPORTSWEAR |
| Indorama Ventures PCL |
COLUMBIA SPORTSWEAR and Indorama Ventures Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with COLUMBIA SPORTSWEAR and Indorama Ventures
The main advantage of trading using opposite COLUMBIA SPORTSWEAR and Indorama Ventures positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if COLUMBIA SPORTSWEAR position performs unexpectedly, Indorama Ventures 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 Indorama Ventures will offset losses from the drop in Indorama Ventures' long position.| COLUMBIA SPORTSWEAR vs. Apple Inc | COLUMBIA SPORTSWEAR vs. Apple Inc | COLUMBIA SPORTSWEAR vs. Apple Inc | COLUMBIA SPORTSWEAR vs. Apple Inc |
| Indorama Ventures vs. Fukuyama Transporting Co | Indorama Ventures vs. NTG Nordic Transport | Indorama Ventures vs. Ming Le Sports | Indorama Ventures vs. Big 5 Sporting |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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