Correlation Between Eagle Materials and INDOFOOD AGRI
Can any of the company-specific risk be diversified away by investing in both Eagle Materials 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 Eagle Materials and INDOFOOD AGRI into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Eagle Materials and INDOFOOD AGRI RES, you can compare the effects of market volatilities on Eagle Materials 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 Eagle Materials with a short position of INDOFOOD AGRI. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eagle Materials and INDOFOOD AGRI.
Diversification Opportunities for Eagle Materials and INDOFOOD AGRI
0.32 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Eagle and INDOFOOD is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Eagle Materials 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 Eagle Materials 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 Eagle Materials 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 Eagle Materials i.e., Eagle Materials and INDOFOOD AGRI go up and down completely randomly.
Pair Corralation between Eagle Materials and INDOFOOD AGRI
Assuming the 90 days horizon Eagle Materials is expected to under-perform the INDOFOOD AGRI. In addition to that, Eagle Materials is 1.12 times more volatile than INDOFOOD AGRI RES. It trades about -0.41 of its total potential returns per unit of risk. INDOFOOD AGRI RES is currently generating about -0.08 per unit of volatility. If you would invest 23.00 in INDOFOOD AGRI RES on October 11, 2024 and sell it today you would lose (1.00) from holding INDOFOOD AGRI RES or give up 4.35% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Eagle Materials vs. INDOFOOD AGRI RES
Performance |
| Timeline |
| Eagle Materials |
| INDOFOOD AGRI RES |
Eagle Materials and INDOFOOD AGRI Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eagle Materials and INDOFOOD AGRI
The main advantage of trading using opposite Eagle Materials and INDOFOOD AGRI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eagle Materials 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.| Eagle Materials vs. SEI INVESTMENTS | Eagle Materials vs. SCIENCE IN SPORT | Eagle Materials vs. CHRYSALIS INVESTMENTS LTD | Eagle Materials vs. Keck Seng Investments |
| INDOFOOD AGRI vs. Casio Computer CoLtd | INDOFOOD AGRI vs. APPLIED MATERIALS | INDOFOOD AGRI vs. Eagle Materials | INDOFOOD AGRI vs. GOODYEAR T RUBBER |
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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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