Correlation Between Plastic Omnium and INDOFOOD AGRI
Can any of the company-specific risk be diversified away by investing in both Plastic Omnium 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 Plastic Omnium and INDOFOOD AGRI into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Plastic Omnium and INDOFOOD AGRI RES, you can compare the effects of market volatilities on Plastic Omnium 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 Plastic Omnium with a short position of INDOFOOD AGRI. Check out your portfolio center. Please also check ongoing floating volatility patterns of Plastic Omnium and INDOFOOD AGRI.
Diversification Opportunities for Plastic Omnium and INDOFOOD AGRI
0.16 | Correlation Coefficient |
Average diversification
The 3 months correlation between Plastic and INDOFOOD is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Plastic Omnium 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 Plastic Omnium 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 Plastic Omnium 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 Plastic Omnium i.e., Plastic Omnium and INDOFOOD AGRI go up and down completely randomly.
Pair Corralation between Plastic Omnium and INDOFOOD AGRI
Assuming the 90 days trading horizon Plastic Omnium is expected to under-perform the INDOFOOD AGRI. But the stock apears to be less risky and, when comparing its historical volatility, Plastic Omnium is 1.06 times less risky than INDOFOOD AGRI. The stock trades about -0.11 of its potential returns per unit of risk. The INDOFOOD AGRI RES is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 21.00 in INDOFOOD AGRI RES on August 30, 2024 and sell it today you would earn a total of 1.00 from holding INDOFOOD AGRI RES or generate 4.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 97.73% |
| Values | Daily Returns |
Plastic Omnium vs. INDOFOOD AGRI RES
Performance |
| Timeline |
| Plastic Omnium |
| INDOFOOD AGRI RES |
Plastic Omnium and INDOFOOD AGRI Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Plastic Omnium and INDOFOOD AGRI
The main advantage of trading using opposite Plastic Omnium and INDOFOOD AGRI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Plastic Omnium 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.| Plastic Omnium vs. Apple Inc | Plastic Omnium vs. Apple Inc | Plastic Omnium vs. Apple Inc | Plastic Omnium vs. Apple Inc |
| INDOFOOD AGRI vs. GOODYEAR T RUBBER | INDOFOOD AGRI vs. Vulcan Materials | INDOFOOD AGRI vs. THRACE PLASTICS | INDOFOOD AGRI vs. Plastic Omnium |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
Other Complementary Tools
| Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. | |
| FinTech Suite Use AI to screen and filter profitable investment opportunities | |
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm | |
| Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk | |
| Instant Ratings Determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance |