Correlation Between Diamond Food and Vastland Indonesia
Can any of the company-specific risk be diversified away by investing in both Diamond Food and Vastland Indonesia 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 Diamond Food and Vastland Indonesia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Diamond Food Indonesia and Vastland Indonesia, you can compare the effects of market volatilities on Diamond Food and Vastland Indonesia 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 Diamond Food with a short position of Vastland Indonesia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Diamond Food and Vastland Indonesia.
Diversification Opportunities for Diamond Food and Vastland Indonesia
-0.35 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Diamond and Vastland is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Diamond Food Indonesia and Vastland Indonesia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vastland Indonesia and Diamond Food 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 Diamond Food Indonesia are associated (or correlated) with Vastland Indonesia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vastland Indonesia has no effect on the direction of Diamond Food i.e., Diamond Food and Vastland Indonesia go up and down completely randomly.
Pair Corralation between Diamond Food and Vastland Indonesia
Assuming the 90 days trading horizon Diamond Food Indonesia is expected to generate 0.86 times more return on investment than Vastland Indonesia. However, Diamond Food Indonesia is 1.17 times less risky than Vastland Indonesia. It trades about -0.04 of its potential returns per unit of risk. Vastland Indonesia is currently generating about -0.05 per unit of risk. If you would invest 78,500 in Diamond Food Indonesia on September 12, 2024 and sell it today you would lose (2,000) from holding Diamond Food Indonesia or give up 2.55% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Diamond Food Indonesia vs. Vastland Indonesia
Performance |
| Timeline |
| Diamond Food Indonesia |
| Vastland Indonesia |
Diamond Food and Vastland Indonesia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Diamond Food and Vastland Indonesia
The main advantage of trading using opposite Diamond Food and Vastland Indonesia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Diamond Food position performs unexpectedly, Vastland Indonesia 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 Vastland Indonesia will offset losses from the drop in Vastland Indonesia's long position.| Diamond Food vs. Sentra Food Indonesia | Diamond Food vs. Garudafood Putra Putri | Diamond Food vs. Wijaya Karya Bangunan | Diamond Food vs. Mitrabara Adiperdana PT |
| Vastland Indonesia vs. Communication Cable Systems | Vastland Indonesia vs. Dharma Polimetal Tbk | Vastland Indonesia vs. Lotte Chemical Titan | Vastland Indonesia vs. Eastparc Hotel Tbk |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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